Bitcoin climbed on Thursday to its highest level in more than two months, coinciding with the official start of the US government shutdown.

The world’s largest cryptocurrency by market capitalization rose about 3.5% in the past 24 hours, briefly touching $119,455 (£88,516) before easing back to trade near $118,500. This marks Bitcoin’s strongest level since mid-August.

Other major cryptocurrencies also posted gains over the past day: Ethereum rose 5.5%, XRP gained 4%, and Solana advanced 6%.

The global cryptocurrency market cap reached $4.17 trillion today, up 4% within 24 hours. Bitcoin’s market dominance currently stands at 56.7%, while Ethereum holds 12.7%, underscoring Bitcoin’s continued position as the strongest asset in investor demand.

Government Shutdown and Its Market Impact

This surge coincided with the US government’s failure to reach a funding agreement, forcing federal agencies to close and resulting in temporary furloughs for around 750,000 workers at an estimated daily cost of $400 million.

The shutdown also delays the release of key economic data, including the highly anticipated nonfarm payrolls report due Friday, potentially altering monetary policy signals and shifting risk sentiment in markets.

Timothy Messer, head of research at BRN, said: “The US shutdown adds a new variable by removing key economic data and amplifying uncertainty. Options markets already reflect this fragility, as traders hedge against downside risks. At the same time, Bitcoin options remain relatively cheap compared with realized volatility.”

In other words, investors are paying for downside protection, but the cost of this insurance remains low relative to Bitcoin’s volatility, signaling a market in wait-and-see mode that leaves room for traders to speculate on big moves at low cost.

Gold and Cryptocurrencies in the Spotlight

Gold has also been a key beneficiary of mounting financial and political pressures in the US, ending September with a 12% monthly gain — its strongest advance since 2011. This reflects a broader investor shift toward tangible assets, as Fed officials continue to warn about inflation remaining “too high.”

New York Fed President John Williams reiterated that interest rate cuts remain conditional on incoming economic data, which may now face delays due to the shutdown.

Meanwhile, the cryptocurrency market sits between supportive inflows and cautious derivatives positioning. ETFs have provided momentum, with spot Bitcoin ETFs recording net inflows of $676 million on Wednesday, marking a third straight day of gains. Spot Ethereum ETFs also logged $80.79 million in inflows over the same period.

Is the Shutdown’s Impact Overstated?

Some analysts argue the shutdown’s market impact may be overstated. QCP Capital noted: “From a fiscal policy perspective, the US government shutdown should be a marginal market event, aside from delayed data and media noise. Essential services remain in place, wage compensation cushions income effects, and previous episodes did not derail risk assets. During the 35-day 2018–2019 shutdown, the S&P 500 rose about 10%. Given Bitcoin’s high correlation with equities, we view any pullbacks linked to the shutdown as buying opportunities, rather than chasing rallies.”

October: Historically a Strong Month for Bitcoin

Historically, October has been one of Bitcoin’s strongest months. Over the past 12 years, Bitcoin has posted gains in 10 Octobers, ranging from +10% to +40%. Seasonal patterns also tend to support Q4 overall, with Bitcoin rising in four of the last five fourth quarters.

CryptoQuant analyst Alex Adler Jr. noted that the current market setup shows Bitcoin in a “balance with upside potential” toward $130,000:

“The upper bound of this range is currently around $130,000, an area where short-term holders often take profits.”

With Bitcoin already pushing toward its two-month highs, seasonal historical factors and technical positioning suggest that the bullish momentum could continue through year-end.

Oil prices fell on Thursday, extending their losing streak to a fourth consecutive session amid concerns over oversupply in the market.

Brent crude futures for December delivery dropped by 52 cents, or 0.8%, to $64.83 a barrel by 09:53 GMT, marking their lowest level since June. US West Texas Intermediate (WTI) crude also declined by 52 cents, or 0.8%, to $61.26 a barrel. Both benchmarks had fallen about 1% earlier in the volatile session.

On Monday, Brent and WTI closed down more than 3% in their biggest daily loss since August 1, before extending declines on Tuesday with an additional 1.5% drop each.

Hiroyuki Kikukawa, chief investment strategist at Nissan Securities Investment, said the US government shutdown has added uncertainty to the global economic outlook, while expectations of higher OPEC+ output are weighing on sentiment.

According to three sources familiar with the talks, the OPEC+ alliance of oil-producing nations may agree in November to raise output by as much as 500,000 barrels per day — triple the scheduled increase for October — as Saudi Arabia seeks to reclaim market share.

Meanwhile, Jorge Montepeque, executive director at Onyx Capital Group, noted that some banks such as Macquarie have issued forecasts of a looming “supply glut” in the oil market, which has further pressured investor sentiment.

Western pressure on Russia and escalating support for Ukraine

Finance ministers from the Group of Seven said on Wednesday they would take steps to increase pressure on Russia by targeting entities that continue to buy Russian oil or facilitate sanction evasion.

In the same context, two US officials confirmed to Reuters that Washington will provide Ukraine with intelligence enabling long-range missile strikes against Russian energy infrastructure, corroborating a report by the Wall Street Journal.

The report added that this step will make it easier for Ukraine to target refineries, pipelines, and other facilities to deprive the Kremlin of oil revenues.

Giovanni Staunovo, commodities analyst at UBS, said: “There is renewed concern in the market about potential disruption to Russian oil supplies, but as long as no actual disruption occurs, the impact on prices will remain limited.”

Chinese demand and rising US inventories

Traders noted that demand from China, the world’s largest crude importer, for storage has helped support oil prices and limited losses.

The US Energy Information Administration said on Wednesday that US crude, gasoline, and distillate inventories rose last week as refinery activity and demand weakened.

Crude stocks rose by 1.8 million barrels to 416.5 million in the week ending September 26, compared with expectations for a 1 million barrel increase in a Reuters poll.

The US dollar fell against most major currencies yesterday and continued its weakness today. Despite attempting to recover some of its losses following the US Supreme Court’s decision to review in January a case concerning Federal Reserve Board member Lisa Cook — allowing her to remain in her position temporarily — the greenback extended its losing streak for a fourth consecutive session.

With the US government entering shutdown yesterday, and the Supreme Court delaying its ruling on Cook’s case, concerns over Fed independence may temporarily take a back seat.

Analysts note that the bigger worry for investors may be the lack of economic data due to the shutdown, which makes it harder to form a clear assessment of US economic prospects and the Fed’s policy trajectory. However, market movements remain far from panic.

Disappointing ADP Report Draws Attention

The main driver behind the dollar’s weakness was not necessarily the government shutdown, but rather the suspension of Friday’s official jobs report, which shifted traders’ focus more heavily to the ADP survey for a snapshot of September’s labor market performance.

The report showed that the private sector lost 32,000 jobs instead of an expected gain of around 52,000, heightening concerns about a deeper slowdown in the labor market.

Although the ISM manufacturing PMI came in better than expected, the employment sub-index remained in contraction territory, while input prices slowed, providing further reasons for dollar traders to maintain short positions.

Impact on Fed Expectations

Market expectations for Federal Reserve policy were also affected. A 25-basis-point rate cut in October is now fully priced in, while another cut in December is seen as almost certain.

As for 2026, where expectations had previously pointed to two more quarter-point reductions, markets are now pricing in close to 70 basis points of additional cuts.

Gold prices rose slightly in European markets on Thursday, extending gains for the sixth consecutive session and trading near record highs, on course to surpass the $3,900 per ounce barrier for the first time in history, supported by the continued decline in US dollar levels in the foreign exchange market.

In addition, strong expectations remain that the Federal Reserve will cut interest rates twice before the end of this year. To reprice those expectations, markets await the release of more key data on the state of the US labor market, which the Fed relies heavily upon in shaping its monetary policy tools.

Price Overview

Gold prices today: gold rose by 0.25% to $3,874.83, from the opening level at $3,865.62, with a low of $3,852.94.

At Wednesday’s settlement, gold prices gained 0.2%, marking a fifth straight daily increase, and recorded an all-time high at $3,895.34 per ounce.

US Dollar

The dollar index fell on Thursday by 0.15%, extending losses for the sixth consecutive session and nearing its lowest level in several weeks, reflecting the continued decline in US currency levels against a basket of global peers.

This drop comes amid a series of weak US labor market data, which strongly reinforces expectations for two Fed rate cuts this year, alongside ongoing concerns over the government shutdown.

US Interest Rates

Data on Wednesday showed that US private companies unexpectedly lost jobs in September, marking a second consecutive monthly decline.

The Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday indicated slight growth in openings during August, along with a slowdown in hiring, suggesting weakening labor market strength.

Traders increased their bets on the Federal Reserve cutting interest rates two more times this year.

Following the above data, and according to the CME FedWatch tool: market pricing for a 25 basis point Fed rate cut in October rose from 90% to 99%, while the probability of rates staying unchanged fell from 10% to 1%.

To further reprice these expectations, markets now await the release of more key US labor data, including weekly jobless claims later today, and Friday’s nonfarm payrolls report for September.

Gold Outlook

Matt Simpson, senior analyst at City Index, said: weak ADP employment data ahead of the nonfarm payrolls report revived bets on Fed rate cuts to weaken the US dollar. He added that gold also received a boost from the US government shutdown.

Goldman Sachs stated in a note: the upside risks to our gold price forecast of $4,000 per ounce by mid-2026, and $4,300 per ounce by December 2026, have increased further due to speculative positioning and the sharp surge in holdings of Western exchange-traded funds (ETFs).

SPDR Fund

Gold holdings with SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 6.01 metric tons yesterday, marking a fourth consecutive daily increase. Total holdings climbed to 1,018.89 metric tons, the highest level since July 13, 2022.