Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin and Ethereum have shown signs of stabilization following a period of recent volatility, as the ongoing two-week U.S. government shutdown continues to impact key economic data releases. Despite the delay of the September Consumer Price Index (CPI) report, now rescheduled for October 24, Federal Reserve Chairman Jerome Powell indicated that the committee possesses enough information to proceed with planned rate cuts before the end of the year.
Market Performance and Macro Factors
Bitcoin (BTC) recently traded around $112,127, marking approximately a 1% gain over the past day, while Ethereum (ETH) reached $4,094, up 3.6% in the same period. Bitcoin remains less than 12% below its recent all-time high of over $126,000, and Ethereum is about 18% shy of its own record.
The market narrative is evolving, shifting from a rate-sensitive environment to one driven by liquidity. This shift has propelled gold to new highs, with futures briefly crossing $4,200 per ounce, driven by central bank buying, de-dollarization flows, and institutional portfolio hedging, according to QCP Capital Business Manager Hui Wen Thoo.
Discussions around Bitcoin’s role in the “debasement” trade—where investors hedge against weakening fiat currencies using precious metals, stocks, and BTC—have continued. Analysts suggest that current conditions have paused, but not reversed, the argument for Bitcoin’s standing alongside gold and equities as an inflation hedge.
Government Shutdown and Economic Data
The U.S. government shutdown, which began on October 1, has now lasted two full weeks, causing the postponement of critical economic reports. The Bureau of Labor Statistics (BLS) announced that the September CPI report, a key indicator for Federal Reserve monetary policy, will now be released on Friday, October 24.
This rescheduling, an exception made to prevent delays in Social Security Administration benefits processing, means the report will arrive just days before the next Federal Open Markets Committee (FOMC) meeting. The BLS stated that “no other releases will be rescheduled or produced until the resumption of regular government services.”
Federal Reserve Stance and Historical Context
Despite the data delays, Federal Reserve Chairman Jerome Powell expressed confidence in the committee’s ability to make informed policy decisions. Speaking at the National Association for Business Economics (NABE) conference, Powell noted that “privately produced measures of the jobs market… provide enough grounds to show the jobs market was cooling,” even without new BLS data.
Historically, the Fed has navigated monetary policy during government shutdowns. During President Bill Clinton’s administration, two shutdowns in 1995-1996 overlapped with FOMC meetings. Then-Federal Reserve Chairman Alan Greenspan acknowledged the shutdown as a “downside risk to the expansion” at the time.
Current inflation, last reported at 2.9% in September, is comparable to the 2.5% to 3% range during the 1995 shutdown. The CME FedWatch Tool currently indicates a 97% probability of a 25-basis point rate cut this month and a 94% chance of another similar cut in December.
Market Expectations
Users on Myriad, a prediction market, had anticipated the shutdown would extend beyond mid-October, with the market resolving as such. More recently, 83% of Myriad users signaled uncertainty regarding the FOMC enacting exactly two rate cuts in 2025, following one already approved in September, though it’s unclear if this implies expectations for one or three cuts.
