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Bitcoin (BTC) has started a new surge in early October 2025, breaking above the $117,000 barrier and trading as high as $118,652. This is due to a combination of macroeconomic shocks, regulatory advances, and optimistic on-chain signals. This rise—3.79% in the last 24 hours, 1.14% in the previous four hours, 4.67% weekly, and 8.59% monthly—shows that the market is bouncing back from September’s consolidation. This is due to the growing U.S. government shutdown problem and the always-present hope of “Uptober.” BTC’s momentum seems unstoppable as of October 3, 2025. Analysts at XWIN Research Japan, through CryptoQuant, say this is due to a “perfect storm” of fiscal instability, forecasts of Fed easing, and institutional inflows. Bitcoin has already gone up more than 120% this year, and this recent rise shows how the asset has changed from a speculative play to a macro hedge. However, the U.S. shutdown’s repercussions on other countries add a layer of geopolitical interest that might keep the rally going or cause it to become more volatile if it lasts too long.
The US Government Shutdown: A Reason for Crypto Safe-Haven Flows
The U.S. federal government shutdown, which started on October 3, 2025 and is now in its third week, is the main reason for Bitcoin’s rise in October. The shutdown started on September 30 because Congress couldn’t agree on a $6.2 trillion spending bill. Partisan arguments over border security and clean energy subsidies made things worse. It has put 2.1 million federal workers on leave, stopped non-essential services, and frozen $1.5 billion in daily economic activity. This is the fourth time this has happened since 2013, but the timing, with economic data getting worse, has made investors more nervous, pushing them toward traditional safe havens like gold (up 2.5% to $2,650/oz) and, more and more, Bitcoin.
The shutdown’s immediate effects include delayed non-farm payrolls (NFP) data, which are important for Fed rate decisions. The ADP Employment Report also showed that 32,000 jobs were lost in September, the biggest reduction in more than two years. According to data from the CME FedWatch Tool, traders are betting on a 95% chance of a 25 basis point decrease at the FOMC meeting on October 29-30. This is because the labor market is shrinking and core PCE inflation is at 3.2%, which is below the Fed’s 2% target. XWIN Research Japan’s chief analyst, Hiroki Tanaka, said in a CryptoQuant analysis, “Shutdown-induced uncertainty is amplifying risk-off sentiment, but Bitcoin’s scarcity narrative shines brighter in chaos.” This week, BTC’s correlation to gold dropped from 0.42 in August to 0.65, as institutional flows look for yields that aren’t tied to other assets.
The shutdown’s negative effect on the economy, which the Congressional Budget Office estimates to be $18 billion a week, has caused the USD Index (DXY) to drop 1.2% to 100.45, its lowest level since July. This drop in the value of the dollar makes crypto more appealing: Bitcoin’s fixed supply cap of 21 million is very different from fiat’s inflationary forces. This is similar to the shutdown in 2018–2019, when BTC rose 150% in the next six months. Tanaka said, “Fiscal paralysis erodes confidence in the dollar; Bitcoin steps in as the neutral reserve,” and he pointed out that $450 million in spot BTC ETF inflows came in on October 2 alone.
The political deadlock—caused by House Republicans’ demand for $20 billion for the border wall and Democrats’ refusal to cut energy subsidies—has brought attention to crypto’s role in election-year stories. President Trump has publicly supported Bitcoin as a “strategic reserve” asset, most recently at a speech at Mar-a-Lago on September 28. This has made people feel even better about it. His government is even talking about utilizing seized assets to start a “Crypto Shutdown Relief Fund.” @APompliano joked on X, “Shutdown? More like getting ready for Uptober—BTC doesn’t take time off. Analysts say that if the issue is fixed by mid-October, BTC might drop by 10–15% as people take profits. If it takes longer, the rally could continue toward $125,000.
Tax breaks and ETF momentum are helping the regulatory environment
Changes in U.S. policies that make Bitcoin more appealing to institutions are adding to the bigger story. On September 27, the Treasury Department made it clear that unrealized gains on corporate Bitcoin holdings, like MicroStrategy’s $15 billion stockpile, won’t be taxed until they are realized. This is good news for anybody that use balance sheets. Tanaka says, “This gets rid of a lot of friction, encouraging long-term HODLing and possibly adding $50 billion in corporate BTC exposure by 2026.” Tesla, which stopped selling BTC in 2021 because of accounting problems, has said it will buy back $1 billion worth of BTC. Amazon’s AWS blockchain business is also looking at BTC nodes for cloud services.
The SEC’s October docket adds fuel: The reviews for spot Solana (SOL) and XRP ETFs will start on October 15. The new generic listing rules were approved on September 17, so approvals are probable. BlackRock’s iShares Bitcoin Trust (IBIT) went from $60 billion in July to more than $80 billion AUM on September 30. Fidelity’s FBTC topped $12 billion, bringing total spot BTC ETF inflows for September close to $1 billion. According to a leaked internal memo, Vanguard, which has been skeptical of cryptocurrencies for a long time, is “reassessing” its position. This might open up $8 trillion in AUM for digital assets. Tanaka said, “ETFs are the on-ramp; tax clarity is the accelerator,” and he predicted that $150 billion will come in by the end of the year.
Strength and derivatives on the chain Frenzy
The fundamentals of Bitcoin support the price movement. The amount of BTC in exchanges has dropped from 2.61 million on September 1 to 2.49 million now, a 4.6% reduction that shows people are holding on to their coins because they are afraid of a shutdown. According to Glassnode, long-term holder (LTH) supply reached 14.8 million BTC (75% of circulating), the highest level since May. This lowered the pressure to sell and made the currency more scarce. The “Uptober” impact, which is Bitcoin’s record 80% win rate in October with an average gain of 28% since 2013, adds a seasonal flavor, as @RektCapital pointed out on X. The derivatives markets agree with the bull case: According to CoinGlass, the number of BTC futures contracts traded in the last 24 hours jumped 48.66% to $120.32 billion, the open interest rose 6.27% to $85.77 billion, and the options volume rose 61.08% to $7.4 billion. The call/put ratios were 1.2:1, which means people were betting on the market going up. The funding rates were 0.015%, which is good but not too high. “Deriv frenzy confirms conviction; shutdown liquidity won’t fade BTC’s shine,” Tanaka said in the end.
Conclusion
In early October 2025, Bitcoin broke beyond $118,000, which was a mix of macroeconomic problems (the U.S. shutdown costing $18 billion a week), policy benefits (the unrealized gains tax exemption and ETF approvals), and technical strength (LTH supply peaks and the derivatives boom). With the historical halo of Uptober and the Fed cuts coming up, the rally’s base feels strong. It might reach $125,000 by the end of the month. But there is a chance of a 5–10% fall after the shutdown is ended, and people who have too much debt should be careful. For investors, this is Bitcoin’s macro maturity: A hedge in turmoil, made worse by institutions. Tanaka nails it up: “The cycle goes on; fiscal folly fuels the fire.”
