Bitcoin price has increased It rose 12.14% last week, erasing losses from a lackluster September. Altcoins were primarily responsible for the large-scale rally from July to September, butthis bull market was led by Bitcoin.
During the same period, major altcoins such as Ethereum (ETH) and Solana (SOL) posted more modest gains of 12.90% and 13.24%, respectively.
Why the bulls: Government shutdowns, jobs, and the Fed
The main driver of last week’s rise was the U.S. government shutdown that began at midnight ET on Wednesday. During a government shutdown, U.S. government employees stop working and the government is unable to use its budget. This includes federal employee salaries and other government spending.
Market participants viewed this situation as a significant source of economic uncertainty and believed that the Federal Reserve would be forced to cut interest rates at the FOMC meeting in late October.
According to CME Group’s FedWatch tool, the probability of a U.S. interest rate cut in October was about 89% on September 30, but rose to 98% once the government shutdown was confirmed later that afternoon. At that moment, Bitcoin, which had been trading around the $112,000 level, began to rise rapidly.
Weak employment data also fueled the Bitcoin bull market. The US ADP employment report for September released on Wednesday was -32,000, well below market expectations of +50,000. This data supports the view that the U.S. labor market is in a downturn.
According to FedWatch, the market is currently pricing in four additional rate cuts by next June. Since the government shutdown began, the US Republican Party has announced further layoffs of federal workers during this period.
The move is seen as an attempt by President Donald Trump to complete federal workforce cuts that he failed to accomplish during his administration. If this effort is successful, the U.S. unemployment rate, currently at 4.3%, could rise significantly. Nonfarm payrolls are already low, and rising unemployment could force the Fed to cut rates further.
Japanese politics also plays a role
On Friday, Sanae Takaichi was elected president of Japan’s Liberal Democratic Party and will likely become prime minister. The prime minister is expected to launch a policy of weakening the yen.
His predecessor, Fumio Kishida, had considered raising interest rates to combat inflation, but Takaichi’s policies are expected to lead to monetary easing. Against this backdrop, the price of Bitcoin at one point rose to more than $125,500 over the weekend, hitting a new all-time high.
In summary, Bitcoin’s price rise is the result of market participants acting quickly based on future expectations. They expect global liquidity to ease further in the near future. However, it is difficult to predict how market sentiment will change if the US government shutdown continues.
The U.S. Treasury bond auctions on Monday and Tuesday will be the most interesting events of the week. Training for 2 daysAshley will issue $249 billion in short-term debt. Based on past precedent, such auctions are likely to continue despite the closure.
This would severely limit excess liquidity in the market without government spending. Bitcoin price has increased by more than 10% in just three days. It remains to be seen whether the stock can continue to rise even amid the short-term liquidity crunch.
Pay attention to Powell’s Thursday speech
A number of macro indicators are on the agenda this week. The Conference Board’s employment trends index will be released on Monday.
The New York Fed’s Consumer Expectations Survey will be released on Tuesday. The September FOMC meeting minutes and the 10-year US Treasury bond auction are scheduled for Wednesday.
And on Thursday, Federal Reserve Chairman Jerome Powell is scheduled to speak on the occasion of the 30-year U.S. Treasury bond auction. Several other Fed officials are also scheduled to give public speeches. However, these events are unlikely to shake the market’s strong expectations for an October rate cut.
Rather, impromptu government shutdown-related measures by the U.S. Congress may have an impact on the market. The Trump administration’s approach to laying off federal employees could also be a source of change. We hope it will be a profitable week for investors.
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