Bitcoin With the US government shutting down operations, it jumped to its highest in over two months and set the stage for a presumably aggressive Fiat liquidity impulse.
Coindesk data shows that major cryptocurrencies have risen nearly 4% in the last 24 hours, with prices temporarily rising to $119,455 for the first time since mid-August. Other major tokens such as ether , Solana and It rose 7% from 4%. The Coindesk 20 Index (CD20) jumped from 5% to 4,217 points.
The rally follows the US government closure on Wednesday after a strongly divided Congress prevented officials from reaching fundraising agreements.
The shutdown could delay official monthly job figures, a non-farm salary report on Friday. This will facilitate access to funds, reduce borrowing costs, and promote economic growth and risk taking in financial markets.
“If ADP is the main signal and BLS prints are delayed, the Fed could offer a 25 bp cut in October and pair it with guidance to maintain a second cut on the table by December. BTC, “Crypto Research Strategist, Matt Mena, from 21Shares, said in an email.
Wednesday’s ADP Private Salary Report painted a dark picture of the labor market and bolstered cases of continued interest rate cuts by the Fed. The central bank cut 25 basis points last month, suggesting it will ease further in the coming months.
Mena added that rising prices for BTC could be a hint for an impending explosive rally in the wake of government shutdowns.
“The message is clear. As traditional data is released with high flux and macro uncertainty, Bitcoin is one of the few assets that thrive when an old playbook breaks down.
The options look cheap
One way to play the imminent big moves while hedged is likely to use Delibit listed options, according to director Greg Magadini, director of derivatives at Amberdata.
“After the long ‘dry spell’ of BTC volatility, the US government closure could ultimately be a catalyst for BTC to become a lot of movement,” Magadini told Koindsk. “This, coupled with the sudden contango of the implicit volatility terminology structure, makes the options look cheap.”
The sudden contango of the period structure of implicit volatility (IV) expressed by an upward IV curve from roughly period to long-term maturation indicates that the market expects future volatility to be significantly higher than short-term volatility.
This makes short-term options relatively cheap. The price of the option is affected by implicit volatility.
Magadini cited Longstraddle as one of the preferred strategies for playing the imminent volatility boom. This includes purchasing both call and put options at the same time at the same strike price and at the same expiration date. Call options gain value when the price of the underlying asset increases, while put options provide protection against price drops. Together, this means profiting from large price movements in either direction.
“USD could see a flow on the back of the shutdown and in the pay number this week… This could lead to these catalysts gathering BTC (as dollar hedges) (if risk assets are panicking) or focusing BTC,” he said.