Bitcoin Tops $119K, XRP, SOL, ETH Surge as U.S. Government Shutdown Takes Effect; BTC Options Look Cheap

Core Insights - Bitcoin (BTC) has surged to its highest price in over two months, reaching $119,455, following a U.S. government shutdown that may create a positive liquidity impulse in the financial system [1][2] - Other major cryptocurrencies, including ether (ETH), XRP, solana (SOL), and dogecoin (DOGE), have also experienced price increases ranging from 4% to 7% [1] - The CoinDesk 20 Index (CD20) rose by 5% to 4,217 points, indicating a broader positive trend in the cryptocurrency market [1] Economic Context - The U.S. government shutdown resulted from a divided Congress failing to reach a funding agreement, which could delay the release of the nonfarm payrolls report [2] - This delay may lead to a positive liquidity expansion in the financial system, facilitating easier access to funding and potentially stimulating economic growth and risk-taking in financial markets [2] Federal Reserve Implications - If the ADP report serves as a leading indicator and the Bureau of Labor Statistics (BLS) report is delayed, the Federal Reserve may implement a 25 basis point rate cut in October, with further cuts possible by December [3] - Such actions could lower real yields and weaken the dollar, creating a favorable environment for Bitcoin and other cryptocurrencies [3][4] Market Sentiment - The recent ADP private payrolls report highlighted a weak labor market, reinforcing the case for continued rate cuts by the Federal Reserve [4] - Analysts suggest that Bitcoin's price increase following the government shutdown could signal the potential for a significant rally in the cryptocurrency market [4][5] Options Market - Deribit-listed options are currently perceived as inexpensive, providing a hedged way to capitalize on anticipated volatility in Bitcoin [6] - The U.S. government shutdown may act as a catalyst for increased Bitcoin movement, with steep contango in implied volatility making options attractive [6]