After expectations for prolonged high interest rates from the U.S. Federal Reserve began to ease, political and monetary factors provided strong support. On Wednesday, U.S. government agencies shut down after Republicans and Democrats failed to reach consensus on raising the debt ceiling, pushing investors away from the dollar and into alternative assets, including crypto. Analysts expect the shutdown to last at least two weeks, depriving traders of timely economic data and complicating decision-making. In addition, decisions on 16 crypto-based ETFs, with deadlines in early October, are likely to be delayed. Just yesterday, the SEC missed its ruling on the Canary Litecoin ETF (LTC), raising fresh doubts about how the regulator will handle dozens of pending filings under the new generic listing standards.
Despite this, major digital assets continued to rise, supported by weak U.S. labor market data from ADP: September private sector jobs fell by –32K against expectations of +52K, while August was revised down from +54K to –3K. This boosted bets on a dovish Fed pivot this month, with probability estimates climbing to 90.0%.
ETH was the standout performer of the week, supported by surging Ethereum ETF inflows and a 47.0% jump in DEX trading volumes on Ethereum — from $22.9 billion to $33.9 billion. Additional support came from supply contraction: according to Cointelegraph, ETH’s circulating supply has dropped to its lowest since 2016 amid rising institutional accumulation.
Overall, the market backdrop remains fragile: investor optimism is intact as crypto is increasingly seen as a hedge during the U.S. government crisis, but a prolonged shutdown could stall critical regulatory decisions for the industry.
Next week, most digital assets are likely to extend their rally or enter a consolidation phase.