How Economic Uncertainty Fuels the Crypto Boom
On October 1, the U.S. government partially shut down. Why was this a bullish signal for crypto?
A government shutdown occurs when the U.S. Congress fails to pass a budget or a temporary funding resolution. In 2025, this situation was triggered by political disagreements over funding allocations for key programs, including social services and infrastructure. When government agencies halt operations, the release of critical economic data, such as employment reports or inflation figures, is delayed. This lack of transparency creates uncertainty in traditional financial markets, prompting investors to seek alternative assets like Bitcoin and other cryptocurrencies, which many view as a safe haven during times of instability.
When the U.S. government shuts down partially and economic data releases are delayed, the Federal Reserve lacks clear information, increasing the likelihood of interest rate cuts. This means money will flow into crypto.
What Is the Connection Between the U.S. Federal Reserve and Crypto?
The connection between the Federal Reserve and crypto lies in the macroeconomic decisions the Fed makes, which influence the crypto market for several reasons:
Interest Rates: When the Fed cuts interest rates (e.g., a 99% chance of a 25 bps cut in October 2025), money becomes “cheap,” and investors shift capital from safe assets (bonds) to riskier assets like BTC or ETH. For example, the September 2025 rate cut led to a 10% weekly increase in Bitcoin.2. Banking Regulations: When the Fed relaxes rules (e.g., SR 22–6 withdrawn in April 2025), it allows banks to enter crypto more easily, attracting inflows into ETFs ($5.95 billion last week).
Cryptocurrencies, particularly Bitcoin, are seen as decentralized assets, independent of government policies or central bank decisions. Bitcoin’s history shows it tends to rally during periods of macroeconomic crisis, as seen during the 2020 pandemic or the high inflation of 2022.
What Price Could Bitcoin Reach This Month?
According to CoinDCX, Bitcoin could reach $128,000 – $130,000 by mid-month. What can I do about it? I’ll take advantage of the situation and generate short-term profits. The rest of my portfolio is invested in altcoins with real utility. What’s my plan moving forward? I’ll be patient.
As Robert Arnott said: “In investing, what is comfortable is rarely profitable. Patience turns opportunities into wealth.”
Risks to Watch Out For
It’s true that there are risks, and we must consider them. Here are the risks to watch out for if you want to capitalize on Bitcoin’s potential to reach $128,000 – $130,000 by mid-month.
If the U.S. shutdown is prolonged, for example, lasting two weeks, GDP drops by approximately 0.15% per week. In this case, investor confidence declines, and Bitcoin could correct to $118,000 – $120,000. In this scenario, I’ll sell my investment when I notice weakness in the market. It’s wise to be prepared for such a scenario, as it’s possible.
There’s also the risk of “whales” selling off massively. Recently, they took $838 million in profits. If they decide to sell heavily, the price could stagnate or drop.
Beyond the risks mentioned, the inherent volatility of the crypto market remains a challenge. Rapid price swings in Bitcoin can be amplified by unexpected news, such as a sudden Federal Reserve decision or new government regulations. In 2025, several countries, including the U.S., have intensified discussions about crypto regulation, which could impact investor confidence. If, for example, the Securities and Exchange Commission (SEC) imposes stricter rules on crypto exchanges, Bitcoin’s price could face a sharp correction, even during a government shutdown.
How to Approach Crypto Investments with Caution?
To mitigate risk, I read as much as possible about financial markets. I don’t invest large sums in highly speculative coins, allocating only 1–2% of my portfolio to them. I also plan to prepare for the next cycle by holding cash to buy Bitcoin at a lower price. Diversifying your portfolio by investing in altcoins with real utility can reduce risk. Setting a clear risk management plan, such as using stop-loss orders or closely monitoring whale trading volumes, can protect against unexpected losses.
I want to emphasize that it’s crucial to verify information from multiple sources and not focus only on what’s obvious, because: “You can’t see beyond the stars if you’re always looking at the moon.”
If you decide to invest, do so while being aware of the risks involved. And when you face them, don’t forget: “The man who runs barefoot doesn’t complain about the pain caused by stones.”
Note: This is not financial advice.
Why Bitcoin Broke $125,000: What Does the U.S. Shutdown Mean for Crypto? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.