Why The Crypto Market Is Surging Today Amid Key Catalysts?

Key Insight:

• The cryptocurrency market is experiencing a surge, with Bitcoin reclaiming the $116,000 resistance level.
• The rally happened as the US government shutdown started.
• The SEC is hoping to approve crypto ETFs this month.

The crypto market is surging today, October 1. This crypto rally coincides with the start of the US government shutdown.

Rising bearish liquidations and increased futures open interest are also fueling the momentum. Bitcoin price jumped to $116,000, while the market capitalization of all coins surpassed $4 Trillion.

Crypto Market Going Up as Government Shutdown Starts

The crypto market is surging today as the US government begins its shutdown. This disruption stems from escalating disagreements between the Democratic and Republican parties. Political gridlock is fueling uncertainty, which often benefits alternative assets, such as cryptocurrencies.

Republicans have advocated for a clean spending bill that extends through the end of the fiscal year. This runs through November. Meanwhile, Democrats are using their leverage to advocate for changes to healthcare and Medicaid spending.

It is unclear how long this shutdown will last. In the past, the shutdown lasted between a few days and a maximum of 35 days. Therefore, the cryptocurrency market is experiencing growth for two primary reasons.

First, the crypto rally is likely due to the shutdown. This may impact economic growth and prompt the Federal Reserve to continue cutting interest rates. Second, the rally is occurring as the US dollar declines and investors shift to safe-haven assets.

Some investors believe that Bitcoin is evolving into a safe-haven asset because of its tokenomics. This also explains why the gold price has surged to a record high.

Crypto Rally Happens as Shorts Liquidations Jump

Meanwhile, the crypto market rally is underway as shorts are liquidated and open interest soars. Data compiled by Coinglass shows that liquidations increased by 60% over the last 24 hours, exceeding $623 Million.

Most of these liquidations occurred on Binance, Bybit, Hyperliquid, and OKX. Ethereum and Bitcoin shorts worth over $160 Million and $158 Million, respectively, were liquidated. The other top coins whose bears were heavily liquidated were Solana, ALPINE, and XRP.

Shorts liquidations occur when exchanges are compelled to close positions due to an asset’s excessive price movement. This triggers a margin call. These liquidations are usually bullish because they lead to forced buybacks and a shift in sentiment.

The rising liquidations coincided with the substantial increase in 24-hour open interest, which soared to $207 Billion. The 24-hour volume in the crypto market increased by 11% to $303 billion.

Upcoming Altcoin ETF Approvals by the SEC

The crypto rally is underway as investors anticipate the SEC’s approval of spot altcoin ETFs this month. The agency has set October as the final deadline for most decisions regarding crypto ETFs. The first one up is Litecoin, with its deadline falling this Thursday.

Other altcoins, such as XRP and Solana, have deadlines next week, and analysts believe that approval will occur then. Polymarket has assigned nearly 100% odds to these approvals. This approval will be vital as it will enable Wall Street investors to allocate capital to these coins.

Recent data shows that these ETFs have substantial demand from investors. For example, the recently launched XRPR ETF has already surpassed $73 Million in assets. At the same time, the DOJE fund recently crossed the $20 Million mark.

Bitcoin and Ethereum ETFs have also been highly successful, with their cumulative inflows reaching $57 Billion and $13 Billion, respectively.

Q4 is a Bullish Period for the Crypto Market

The crypto market is experiencing a surge, driven by its strong historical performance in the fourth quarter. Historically, this has been one of the most challenging periods in the industry’s history.

Since 2013, Bitcoin has averaged an 85% return in the fourth quarter. This performance is notably stronger than in the other three quarters. Bitcoin has also experienced significant growth in the fourth quarter of the last few years.

Ethereum has also had positive performances in the last few quarters. Investors are actively buying these coins in anticipation of a strong fourth quarter.

Optimism is growing as the SEC reviews multiple ETF applications. The Federal Reserve is also expected to continue cutting interest rates. These factors are fueling bullish sentiment across the crypto market.