On October 2nd, Bitcoin’s price momentarily surpassed $121,000, and Ethereum 
$2,378 reached a three-week high by exceeding $4,500. Although prices have slightly retracted, Bitcoin 
$78,323 and Ethereum are currently trading at $119,892 and $4,471, respectively. This rise in the cryptocurrency market coincides with the partial government shutdown that began in the United States on October 1st. The correlation with the S&P 500 has bolstered cryptocurrency rallies during the shutdown phases, aided by equities’ positive performance historically. Meanwhile, gold’s record prices above $3,900 and the narrative of guarding against currency devaluation lend additional support.
Cryptocurrency Rally Reveals Dynamic Growth
Bitcoin’s touch of $121,000 marks its highest point since mid-August. Meanwhile, Ethereum’s rise above $4,500 signals the strongest performance in over three weeks. Despite slight pullbacks, the upward momentum persists, with large-cap cryptocurrencies witnessing a revival in market depth. This uptick in both spot and futures segments is normalizing volatility and expanding price discovery upwards.
Notable gains in cryptocurrency-linked stocks garner attention. Coinbase shares surged more than 7% on the last trading day. In addition, newly public companies Bullish and Circle saw valuations rise by 11% and 16%, respectively. Weekly inflows of approximately $2.4 billion into Bitcoin and Ethereum ETFs have strengthened the liquidity base. Balanced spreads and open interest growth indicate that this rise reflects institutional fund movements rather than speculative jumps.
Reasons Behind the Cryptocurrency Market Climb
Despite the short-term uncertainty caused by the budget deadlock during the partial government shutdown starting October 1st in the U.S., historical data shows no adverse pattern for risk assets. Since 1990, S&P 500’s gains during such shutdowns have spurred similar trends for cryptocurrencies due to deepened correlation. The record levels in the gold market, driven by inflation concerns and budget deficits, bolster Bitcoin’s role as an alternative reserve.
JPMorgan analysts project Bitcoin could potentially reach $165,000 by year’s end, based on a volatility-adjusted gold-parity evaluation. Meanwhile, Swan Bitcoin’s executive director, John Haar, notes strategic allocations are replacing speculative trades, highlighting global debt records and concerns about fiat currency depreciation. Xapo Bank’s investment manager, Gadi Chait, emphasizes the “Uptober” seasonality trend, which has averaged returns of over 14% since 2013, and suggests early signals indicate a similar trajectory this year.
On the monetary policy front, CME FedWatch data indicate a 98% probability of a 25 basis point rate cut by the Fed during the meeting on October 29, 2025. After a four-year pause, the rate cut cycle that commenced in September is first easing financial conditions and boosting risk appetite. The persistent dovish trend, coupled with ETF inflows and the potential closure of valuation gaps sparked by gold, keeps the prospect of testing new market highs alive.
