U.S. Government Shutdown Resolution Looms as Crypto Markets Eye Key Data
Optimism Surrounds Potential End to U.S. Government Shutdown
White House economic advisor Kevin Hassett has expressed optimism about resolving the ongoing U.S. government shutdown, potentially providing relief to investors monitoring the situation closely. Speaking on CNBC's 'Squawk Box', Hassett conveyed that the Trump administration is hopeful for a swift resolution, although he cautioned that more aggressive measures could be taken if Democrats do not cooperate.
Impact of Shutdown and Inflation Data on Markets
The prolonged shutdown, now entering its third week, has caused market unease as political parties remain at odds over budget allocations. Analysts are also focused on how the unusual release of U.S. CPI data could influence Federal Reserve rate decisions and crypto market sentiment. The Republicans are advocating for a temporary resolution with current funding levels, while Democrats seek additional healthcare spending and extended Affordable Care Act tax credits.
Hassett suggested that political considerations might be delaying progress, noting that Democrats could be postponing a vote to reopen the government until after the "No Kings" protests against President Trump conclude. "There's a possibility that things could come together very quickly this week," he remarked, indicating that Democrats might be willing to break the deadlock after the demonstrations.
Market Anticipation Builds Amid Economic Data Releases
The White House advisor hinted at the possibility of "stronger measures" should the impasse persist, reflecting mounting frustration within the administration. The ongoing shutdown disrupts federal operations and escalates pressure on both parties to reach a resolution. This situation coincides with a critical economic data week, heightening market attention.
Crypto investors are particularly focused on upcoming U.S. inflation data, which could affect the Federal Reserve's next rate decision. Recent market indicators show an increased likelihood of an October Fed rate cut, aligning with Bitcoin's recent gains. A decrease in inflation rates could reignite optimism for rate cuts, benefiting liquidity-sensitive assets like cryptocurrencies and impacting fiscal momentum as the year draws to a close.
Prediction Markets Anticipate Shutdown Conclusion by Month's End
According to data from Polymarket, traders are increasingly predicting that the U.S. government shutdown will conclude between October 23 and 26. A protracted shutdown could delay crypto ETF approvals, despite rising investor demand. Polymarket data shows this time frame now holds the highest probability among potential outcomes, increasing from below 10% a week ago to approximately 35% at present. Conversely, the likelihood of a resolution post-mid-November has decreased to around 27%, indicating market anticipation of a breakthrough. Trading volumes on Polymarket have surged, reflecting heightened investor focus on the timing of fiscal reopening, which could influence short-term market sentiment.