Bitcoin traders counting on upcoming U.S. employment data to gauge whether the Federal Reserve will lower interest rates again might be waiting a while as the government nears a potential shutdown.

And how Bitcoin reacts to such an event remains uncertain, analysts say, potentially heightening near-term volatility. Past shutdowns have had differing affects on the price.

“Rate-cut expectations are supportive of risk assets, but bubble concerns and political risk amplify short-term volatility. For crypto, this creates both liquidity support and added downside uncertainty,” Bitunix analysts wrote in a note shared with Decrypt. “In the medium term, confirmed rate cuts improve liquidity and support risk assets. In the short term, however, bubble fears and shutdown risk heighten fragility, making sharp “drop-and-rebound” swings more likely.”

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Author: Stacy Elliott