Bitcoin remained largely stable on Tuesday after hitting new record highs above $126,000 in the previous session, supported by strong inflows into US spot exchange-traded funds (ETFs), growing hedging against the weakening dollar amid the prolonged US government shutdown, and the seasonal optimism known as “Uptober.”

The world’s largest cryptocurrency reached an all-time high of $126,186 on Monday but later pared gains as some investors took profits.

As of 02:05 a.m. Eastern Time (06:05 GMT), Bitcoin was up 0.4% at $124,427.9 after surging more than 10% last week.

ETF inflows and hedging against currency debasement support Bitcoin

Data from SoSoValue showed that US spot Bitcoin ETFs recorded net inflows of $3.2 billion for the week ending October 3, the second-highest weekly total since these funds were launched earlier this year.

On October 3 alone, daily inflows reached about $985 million.

This strong demand through ETFs allowed institutional investors to gain exposure to Bitcoin without direct ownership, boosting bullish momentum in the market.

The ongoing US government shutdown has also fueled the rally, as the political stalemate in Washington — which has delayed key economic data releases and heightened policy uncertainty — pushed investors toward hard, non-sovereign assets such as gold and Bitcoin.

This move is often described as a “debasement trade,” where capital shifts from fiat currencies into tangible or digital assets viewed as safer stores of value amid inflation or monetary easing.

It also coincides with the historically positive October trend — known among traders as “Uptober” — a period in which cryptocurrency returns tend to rise.

However, profit-taking followed the record peak, leading to a partial pullback in Bitcoin prices during Tuesday’s trading.

Galaxy Digital launches a competitor to Robinhood

Galaxy Digital (TSX: GLXY) announced the launch of its new “GalaxyOne” platform — a commission-free trading app for stocks and cryptocurrencies — in a direct challenge to Robinhood (NASDAQ: HOOD), whose shares fell 3% on Monday following the news.

The new platform offers services similar to Robinhood’s, including access to over 2,000 stocks and ETFs, as well as cryptocurrency trading and high-yield cash accounts.

Galaxy Digital’s shares rose 7% on Monday after the announcement.

Oil prices were steady on Tuesday as investors assessed a smaller-than-expected production increase by the OPEC+ alliance scheduled for November, amid concerns about a potential global supply surplus.

Brent crude futures rose by 9 cents, or 0.14%, to $65.56 a barrel as of 11:54 GMT, while US West Texas Intermediate (WTI) futures added 8 cents, or 0.13%, to $61.77 a barrel.

Giovanni Staunovo, an analyst at UBS, said: “Oil prices remain resilient as the market watches whether the increase in floating oil inventories will translate into higher stockpiles in OECD countries, while preliminary data from India suggest continued strong oil demand in September.”

The contracts had ended the previous session more than 1% higher after the Organization of the Petroleum Exporting Countries (OPEC) and its allies — including Russia and several smaller producers, collectively known as OPEC+ — decided to raise total output by 137,000 barrels per day starting in November.

The decision ran counter to market expectations for a bolder increase, signaling that the group remains cautious amid projections of a potential oversupply in the fourth quarter of this year and into next year, according to analysts at ING Bank.

On the demand side, India’s fuel consumption rose 7% year-on-year in September, according to data from the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum.

As for supply, J.P. Morgan reported that global oil inventories — including crude stored on tankers — rose every week during September, adding about 123 million barrels for the month.

In China, the government is accelerating the construction of oil storage sites as part of a campaign to strengthen its strategic reserves, according to official data, trade sources, and industry experts.

On the geopolitical front, tensions continue to lend support to oil prices, as the ongoing conflict between Russia and Ukraine keeps energy assets under pressure and heightens uncertainty over Russian crude supplies.

Industry sources said on Monday that Russia’s Kirishi refinery shut down its most productive distillation unit after a drone attack caused a fire on October 4, and recovery operations are expected to take about a month.

The US dollar rose against most major currencies during Tuesday’s trading as the government shutdown continued and concerns grew over its impact on the economy.

The most notable movement at the start of this week was the sharp decline in the Japanese yen, which fell by 1.6% against the dollar on Monday following Takaichi’s victory. Her unexpected win strengthened expectations for continued fiscal stimulus while reducing bets on an imminent interest rate hike by the Bank of Japan (BoJ). This uncertainty pushed both gold and bitcoin to record highs when priced in Japanese yen.

Although Takaichi’s post-victory statements about reconsidering the Bank of Japan agreement and “owning monetary policy” attracted attention, she has recently softened her tone opposing interest rate hikes, after having described them last year as a “stupid move.” This indicates that a full return to the peak of the Abenomics era is unlikely, especially since the Liberal Democratic Party (LDP) is currently governing as a minority government.

In contrast, reading the state of the US economy remains complicated due to the ongoing government shutdown, which has significantly reduced economic visibility. Still, this shutdown represents a tangible drag: S&P Global Ratings estimates it could subtract between 0.1 and 0.2 percentage points from GDP growth for every week it continues.

As for the limited data available — such as the JOLTS report and the September estimates from ADP and Revello Labs — they continue to indicate that the United States is experiencing a “no hiring, no firing” economy, characterized by extremely slow turnover and modest but positive job gains.

So, what can the Federal Reserve (Fed) do under these circumstances?

Despite the shutdown and the lack of new official data, the Fed is forced to draw signals from private-sector indicators and its broad communications network with businesses. So far, markets are pricing in another 25-basis-point interest rate cut by the end of the month.

Here lies a key paradox: how can the apparent weakness in the labor market — slow or stagnant job growth — coexist with solid economic growth projections such as the Atlanta Fed’s estimate of 3.9% GDP growth in the third quarter?

The answer likely lies in the sharp rise in labor productivity. GDP measures total economic output, and if companies produce more goods and services without hiring additional workers, output rises even if employment does not.

This trend is driven by strong capital expenditure (Capex) on technology, especially artificial intelligence (AI) and automation.

Companies are investing capital to improve the efficiency of their existing workforce, increasing productivity per working hour and raising GDP while the number of employees remains unchanged.

The result is a temporary but strong disconnect between rising profits and production on one hand and slow job creation on the other.

The “weakness” in the labor market is not only the result of weaker demand but also of reduced labor supply.

Structural factors — such as lower immigration rates and demographic trends like the retirement of baby boomers, as noted by the St. Louis Federal Reserve — have reduced the “equilibrium” employment growth rate needed to maintain stable unemployment.

This means limited job gains are not necessarily a sign of an impending recession, but rather of a structural scarcity in labor supply.

Moreover, short-term GDP figures can be affected by volatile factors such as sharp declines in imports, creating an impression of stronger growth that does not immediately reflect in job creation.

In the end, these interactions highlight an economy growing more efficiently, increasingly driven by capital-intensive technology, with limited labor-force expansion.

As for central banks, this week remains busy; the minutes of the Federal Open Market Committee (FOMC) meeting are expected on Wednesday, followed by a speech from Fed Chair Jerome Powell on Thursday.

Elsewhere, the Reserve Bank of New Zealand (RBNZ) will be in focus on Wednesday, with a widely expected 25-basis-point rate cut, while the Norges Bank will speak today and the Reserve Bank of Australia (RBA) on Friday.

Gold prices rose in the European market on Tuesday, extending gains for the third consecutive session and continuing to break record highs, after surpassing the $3,900 mark for the first time in history, moving toward the key psychological level of $4,000 per ounce.

The rally comes amid strong demand for the precious metal as a safe-haven asset, driven by political developments in Japan and France, the ongoing US government shutdown, and growing expectations of additional interest rate cuts by the Federal Reserve.

Price Overview

• Gold prices today: Gold rose 0.4% to a new all-time high of $3,977.52 per ounce, up from an opening price of $3,960.94, after hitting an intraday low of $3,941.04.

• On Monday, gold settled 1.9% higher, marking its second straight daily gain, after breaking above the $3,900 level for the first time in history on the back of strong safe-haven demand.

Strong Demand

Demand for gold surged this week, fueled by dramatic political events in Japan and France, as investors sought refuge in the metal amid rising uncertainty in major global economies.

A senior White House official stated that President Donald Trump’s administration will begin mass layoffs of federal employees if negotiations with congressional Democrats to end the partial government shutdown “yield no result.”

US Interest Rates

• Federal Reserve member Stephen Miran reiterated his call for an aggressive rate-cut path, citing the impact of the Trump administration’s economic policies.

• Kansas City Fed President Jeff Schmid said he is reluctant to lower rates further, emphasizing that the central bank should focus on the risk of persistently high inflation rather than perceived labor market weakness.

• Following weak US labor market data last week, the CME Group’s FedWatch tool showed that the probability of a 25-basis-point rate cut in October rose from 90% to 99%, while the odds of keeping rates unchanged fell from 10% to 1%.

• To reassess these expectations, investors are closely monitoring the resumption of US economic data releases and further remarks from Fed officials.

Gold Outlook

• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “Rate-cut probabilities for October and December remain above 80%, which supports gold prices, alongside the ongoing government shutdown, as no resolution has been reached in Congress yet.”

• Goldman Sachs raised its December 2026 gold price forecast to $4,900 per ounce from $4,300 on Monday, citing strong inflows from Western exchange-traded funds (ETFs) and continued central bank buying.

SPDR Fund

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 1.71 metric tons on Monday, marking the third consecutive daily decline, bringing total holdings down to 1,013.17 metric tons.