Bitcoin (BTC) has pushed past the $119,000 mark, hitting its highest level in over a month, just as the United States federal government officially entered a shutdown. The sharp rally in the world’s largest cryptocurrency seems closely tied to the rising economic uncertainty in the U.S., where investors appear to be looking for alternatives to traditional markets. At the same time, a curious trend in the derivatives market suggests Bitcoin options may currently be undervalued.
Key Takeaways
- Bitcoin’s price jumped more than 7% in the last 24 hours, now trading above $119,200.
- The move comes right as the U.S. government shutdown began on October 1, 2025.
- Many investors seem to be treating Bitcoin as a “safe-haven” asset, similar to gold, during this period of instability.
- Implied volatility in Bitcoin options has fallen, making them appear relatively cheap for traders betting on future swings.
The government shutdown began after lawmakers in Congress failed to reach an agreement on a new funding bill for the fiscal year. As a result, many federal agencies have stopped operating, with hundreds of thousands of workers facing furloughs. Economic activity could slow in the weeks ahead. Historically, moments like this, periods of political deadlock and fiscal uncertainty, have often driven investors to move money away from traditional assets and into what they consider safer stores of value.
Bitcoin is one such asset. Unlike government-backed currencies, it isn’t tied to a central authority. With its supply capped at 21 million coins, it’s shielded from the inflationary pressures that can come when governments print more money. That scarcity has long made it appealing as a hedge against potential weakness in fiat currencies, especially the U.S. dollar. Right now, the market’s reaction seems to be underscoring that very point.
But the story isn’t just about Bitcoin’s price. The options market is showing an interesting twist. Options, by design, allow traders to bet on price movements by giving them the right, without the obligation, to buy or sell at a set price before an expiration date. What’s surprising here is the behaviour of implied volatility, or IV, which is essentially the market’s gauge of future turbulence.
Despite Bitcoin’s big jump in spot price, data from crypto analytics platforms shows 30-day implied volatility has fallen to roughly 48%. That’s unusual. Typically, when an asset rallies this strongly, IV rises too, reflecting expectations of sharper swings ahead. The fact that it’s dropped instead means Bitcoin options have become cheaper than one might expect in this kind of market.
For traders, that creates a window of opportunity. Those betting on bigger moves ahead, especially upward, can now buy call options at relatively low prices. It’s a setup that some will see as almost too good to ignore, particularly with the broader economic backdrop still so uncertain.
This gap between Bitcoin’s rising spot price and the falling cost of its options suggests the derivatives market hasn’t fully caught up to the possibility of continued volatility. The longer-term impact of the government shutdown is unclear, of course, but in the immediate term, Bitcoin’s rally highlights its increasingly central role in global finance.
Frequently Asked Questions (FAQs)
Q. What is a U.S. government shutdown?
A. A U.S. government shutdown happens when the U.S. Congress does not pass legislation to fund government operations and agencies. As a result, non-essential federal services stop, and many government employees are temporarily sent home without pay.
Q. Why does a U.S. government shutdown affect Bitcoin’s price?
A. A shutdown creates economic and political uncertainty. It can weaken confidence in the U.S. dollar and the stability of the traditional financial system. During such times, some investors move their money into assets like Bitcoin, which are not controlled by any government and are seen as a “safe haven” to protect their wealth.
Q. What does it mean for Bitcoin options to be “cheap”?
A. When Bitcoin options are described as “cheap,” it means their price, known as the premium, is low. This is usually because of low implied volatility (IV), which is the market’s prediction of how much the price will move in the future. Low IV suggests the market expects a period of price stability, making options contracts less expensive to buy.
Q. Is Bitcoin a safe investment during economic uncertainty?
A. Many investors consider Bitcoin a safe-haven asset due to its limited supply and decentralized nature, which can protect against inflation and government instability. However, Bitcoin is also known for its high price volatility. Its suitability as a safe investment depends on an individual’s risk tolerance and investment strategy.
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