U.S. Government Shutdown Impacts Crypto Market Amid Anticipated Fed Rate Cut

According to PANews, the current crypto market is influenced by macroeconomic policies, regulatory developments, and investor sentiment. The U.S. federal government has been shut down since October 1 due to the failure to pass a funding bill, with the Senate's tenth attempt to advance a temporary funding measure falling short of the 60-vote threshold. This ongoing shutdown means that most economic statistics will be paused. However, the Bureau of Labor Statistics plans to release the September Consumer Price Index (CPI) on October 24 to meet the annual adjustment needs for social security. This report is the only significant data ahead of the Federal Reserve's meeting on October 28-29, where investors almost unanimously expect another 25 basis point rate cut. Federal Reserve Chair Jerome Powell has indicated that the balance sheet reduction may be nearing its end in the coming months. He noted that rising repo rates and other signs suggest tightening liquidity, leading the market to believe that monetary policy will become more accommodative. The options market shows a clear bullish trend, with call contracts accounting for nearly 60% and open interest around 246,000 BTC, compared to 165,000 BTC in put contracts. The scale of open interest is nearing historical highs, with major bets placed on strike prices of $140,000, $200,000, and $120,000 expiring on December 26. In short-term options, call contracts expiring on October 31 with strike prices of $124,000 and $128,000 are leading in transactions, while put contracts expiring on October 24 with a strike price of $108,000 are used for hedging. The weekly at-the-money implied volatility has risen from 30% to approximately 40%, but the monthly volatility increase is only about 2.5%, indicating a relatively orderly market expectation. Overall, the government shutdown has created a data vacuum, but the Federal Reserve's dovish stance and the nearing end of balance sheet reduction provide support for risk assets. Midterm elections and legislative uncertainties encourage institutions and retail investors to place early bets, with bullish sentiment prevalent in the options market. However, if the CPI unexpectedly rises or the shutdown further hampers the economy, short-term volatility may intensify.