What factors contributed to today’s surge in the cryptocurrency market?

As of the latest update, Bitcoin (BTC) was priced at $117,000, reflecting a 3.3% increase over the last 24 hours, influenced by a declining US dollar in the context of a government shutdown.

Investors, feeling unsettled, are leaning towards a more accommodating rate trajectory, which allowed BTC to regain the $114,000 mark and continue its ascent as a hedge against instability, a trend that often emerges when uncertainty meets lower real-yield expectations.

According to Glassnode’s report on October 1, reclaiming the $114,000 level was sufficient to initiate a series of liquidations on short positions, further propelling Bitcoin’s upward movement.

Bitcoin’s rise also lifted major altcoins, with Ethereum surpassing $4,300, marking a 3.9% increase, while BNB traded above $1,020, up 1.4% in the past day.

XRP was priced at $2.92, reflecting a 2.9% daily gain, and Cardano reached $0.8381 with a 3.8% increase. Solana hit $218.20, showing a 4.6% rise, and Dogecoin traded at $0.2444, achieving a 5% price boost.

Macro tailwinds

In September, private payrolls decreased by 32,000, marking the largest decline in approximately two and a half years, coinciding with the shutdown that threatens to postpone official labor statistics.

With market data lacking key releases, traders increasingly relied on proxies, raising the odds for rate cuts and paving the way for a potential crypto rebound. On October 1, Polymarket indicated that the likelihood of a 25 basis point interest rate cut this month exceeded 90% for the first time.

Reuters highlighted the weak Automatic Data Processing (ADP) report and the increasing dependence on private data while government data remains uncertain.

Positioning and capital flows contributed to the sustained movement. Glassnode observed that spot Bitcoin ETFs recorded a 3,200 BTC inflow on September 30.

‘Uptober’

Moreover, the “Uptober” narrative is beneficial. Historically, October has been a strong month for BTC. This week, liquidity is also lower than usual due to Asia’s Golden Week, a recurring trend that facilitates easier movement in order books once momentum shifts.

Demand for ETFs, a favorable calendar, and lighter order books are the driving forces that allow a modest macro surprise to have a more significant impact on prices.

The factors that transform a spike into a sustained trend remain consistent: the dollar and real yields, the duration of Washington’s data blackout, and whether ETF demand continues once liquidity returns to normal after the holiday.

If the dollar remains weak and cut odds remain stable, dip-buyers typically continue to emerge. However, if proxies deteriorate or cease, the current rally could quickly reverse. At present, the balance of influences favors variability.

The increase on October 1 is attributed to a macro push from weaker job data and a softer dollar, a seasonal boost into “Uptober,” and a short squeeze that occurred once the spot price surpassed $114,000.

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