The US government has officially shut down, but despite negative ADP jobs report data, which is typically bad news, the market is viewing it positively, leading to gains in both US stocks and crypto.

Market Overview

US equities continued their rally despite the news of the US government shutdown. All three major indices saw gains, with the Nasdaq rising the most at 0.42% on Wednesday (October 1st, US). Stock futures also continued to trend upward. Oil prices fell to $61.8 per barrel. Gold rose to a high of $3890 per ounce.

Bitcoin saw a significant increase, rising to $118,000. All major altcoins also gained. The overall crypto market capitalization climbed to $4.16 trillion.

Bitcoin ended September with a gain of over 5%. Conversely, ETH fell by over 5.7%. October is historically a month of growth for BTC, with prices mostly rising during this period.

US BTC spot ETFs continued to see inflows, totaling $675.8 million, driven by renewed market optimism. The ETH spot ETF also saw $80.9 million in inflows. SOL saw an inflow of $13.4 million.

The US Government Shutdown - Negative Jobs Report

This week was anticipated to be crucial, with major economic events, particularly the employment and unemployment reports from the US Bureau of Labor Statistics. However, the US government is currently shut down due to a failure to reach a budget agreement, which means the release of key data like the unemployment rate and CPI may be postponed. During the shutdown, employees in essential roles, such as security and airport staff, must continue to work without immediate pay, while those on temporary leave are guaranteed full back pay once the budget is approved. This situation creates internal dissatisfaction due to the disparity in responsibilities and benefits among different groups of workers.

The more concerning issue is that if the shutdown persists, the Federal Reserve (Fed) will lack crucial data to make an interest rate decision at its October 29th meeting, especially without the jobs and CPI reports. Currently, the only available data is the employment report from the private firm ADP, which showed that private sector jobs decreased by 32,000 in September, contrasting sharply with the expert forecast of a 45,000 increase. This represents the steepest decline since March 2023.

The weakness is evident across various sectors: leisure and hospitality lost 19,000 jobs, while professional and business services lost over 30,000. Conversely, education and healthcare added 33,000 jobs. Small businesses (under 50 employees) were hit the hardest, with 40,000 jobs cut, while large corporations added about 33,000 jobs. The ADP report clearly shows that the US labor market is weakening, reinforcing expectations that the Fed will soon cut interest rates to support the economy. According to CME data, 99% of investors predict the Fed will cut by 0.25% in October, and 86% expect a further cut in December. However, some experts warn that bad news about employment only offers a short-term positive impact on the market, as the US economy could face long-term recession risk if job losses become widespread.

Jim Cramer is Optimistic About Crypto

The market is gradually regaining optimistic sentiment, but a surprising factor is causing investors to be cautious—CNBC's famous host, Jim Cramer. This morning, he posted an image of the US national debt clock—which has now surpassed $37 trillion—with the caption, "Buy crypto." This post immediately garnered attention because Cramer has long been famous for his often contrarian predictions, leading the investment community to joke, "do the opposite of what Cramer says and you'll win." However, behind the humor is a notable perspective on how he views crypto.

Jim Cramer, host of "Mad Money" and "Squawk Box," is an influential figure on US financial television. While his short-term market views can be flawed, he maintains a long-term positive outlook on Bitcoin. In a recent interview, Cramer argued that crypto should be viewed more as a form of "financial insurance" than a traditional valuation investment tool. He sees Bitcoin as an asset to hedge against the massive US national debt risk and as an expression of the younger generation's rebellion against the current financial system. He believes that as the government continues to issue bonds to cover budget deficits, the subsequent generation will have to bear that debt, and Bitcoin is a way for them to protect themselves against the devaluation of the USD. Cramer emphasized that continuous money printing and borrowing cause the value of the dollar to weaken gradually, similar to a person having to borrow to spend when their income is insufficient. Therefore, crypto, and Bitcoin specifically, with its decentralized nature and limited supply, become a rational safe haven. Regardless of his occasional short-term views that Bitcoin's price is "too high" or "too low," he has consistently shown long-term conviction in the value of this asset class over many years.

SEC Clears Path for Crypto Custody & Easing Tax Rules

SEC Clears Path for State-Licensed Crypto Custody

The SEC has announced that investment advisory firms can now use state-licensed trust companies to custody crypto for their clients. Typically, client assets must be held in a qualified custodian, such as a bank or a federal trust company. This new guidance means that state-level trust companies are also deemed qualified, provided the investment advisor conducts thorough due diligence and ensures the arrangement is in the clients' best interest. This is a crucial step because it provides the public with more secure options for crypto custody. Companies like Coinbase, Ripple (through Standard Custody), BitGo, and WisdomTree can now be officially recognized as qualified custodians. Although this is not yet a formal, long-term law, it provides immediate clarity that allows funds and managers to confidently custody crypto assets.

US Treasury Eases Tax Rules on Bitcoin for Corporations

The US Treasury Department is preparing to relax regulations for taxing unrealized profits on Bitcoin under the Corporate Alternative Minimum Tax (CAMT). The CAMT, passed in 2022, imposes a minimum 15% tax on large corporations based on "book income" (profit reported in financial statements). The concern was that companies like MicroStrategy could be taxed on unrealized Bitcoin gains (BTC price increases but the asset has not been sold). This would inflate book income and trigger additional taxes without any real cash profit. The Treasury Department and the Internal Revenue Service (IRS) have now clarified that unrealized gains from assets like Bitcoin will not be counted toward CAMT. This means MicroStrategy and similar companies will not be subject to unexpected taxes just because the Bitcoin price rises. They will only be taxed when they actually sell the asset or generate cash income.

Other Crypto & Market Updates

Robert Kiyosaki warned that the market might be heading for a crash after Warren Buffett unexpectedly praised gold and silver, which Kiyosaki sees as a signal that stocks and bonds are about to plummet and a recession may occur. Kiyosaki advises investors to accumulate gold, silver, Bitcoin, and for the second time, he mentioned Ethereum as a hedge against risk.

Charlie Lee admitted that selling all his Litecoin in 2017 brought him severe criticism and affected him psychologically. Now, he hopes the price of LTC rises to lessen the backlash. Despite frequent attacks, Lee believes, "if you're not hated, you haven't done anything significant." He emphasized that being hated proves you have influence, while indifference is what's truly scary.

Telegram CEO Pavel Durov revealed that he bought several thousand Bitcoin in 2013 at about $700/BTC and still holds them today, believing Bitcoin is a currency of freedom that cannot be controlled. He stated that Bitcoin helped him sustain his life when Telegram was operating at a loss, and he predicts BTC's price will reach $1 million because governments continue to print unlimited fiat currency while Bitcoin's supply is limited.

The Japanese hotel company Metaplanet just purchased an additional 5,268 BTC worth $623 million, raising its total holdings to 30,823 BTC. This makes Metaplanet the 4th largest publicly listed company globally to own Bitcoin, following MicroStrategy, MARA Holdings, and XXI. The transaction occurred just after a $632 million purchase on September 21st and is part of a plan to raise $1.4 billion to continue buying BTC and expand its "Bitcoin income-generating" operations in the US.

Coinbase has issued over $1 billion in Bitcoin-collateralized loans and plans to increase the maximum loan limit to $5 million per customer. The asset-backed lending market is forecasted to reach $1.3 trillion by 2030.

Chinese national Tiền Chí Mẫn (Zhimin Qian), also known as Trương Nhã Địch (Yadi Zhang), pleaded guilty in the UK to running a $6.9 billion Bitcoin scam, defrauding over 128,000 victims in China between 2014 and 2017. After fleeing to the UK, she and her assistant, Ôn Kiện (Jian Wen), sought to launder the money through real estate purchases. Jian Wen was sentenced to nearly 7 years in prison last year. UK police seized 61,000 BTC, marking the largest cryptocurrency seizure in the world.

At the Token2049 conference in Singapore, CEO Zack Witkoff revealed that World Liberty Financial is actively researching the tokenization of Real-World Assets (RWAs) such as oil, gas, cotton, and timber. He emphasized that these commodities should be brought on-chain for more transparent and efficient trading. Witkoff disclosed that the company plans to pair these tokenized assets with a $1-pegged stablecoin, ensuring stability and usability in transactions. World Liberty Financial has launched two tokens: WLFI (governance token) and USD1 (stablecoin pegged to the US dollar). The team recently announced that USD1 will be deployed on the Aptos blockchain, becoming the first stablecoin on the Move-language ecosystem.

Forbes estimates that Barron Trump, the youngest son of President Donald Trump, now owns approximately $150 million in assets. At age 19 and a sophomore at New York University, Barron earned about $80 million from selling tokens and is a co-founder of World Liberty Financial. He still holds about 2.3 billion locked tokens, which are currently undervalued due to trading restrictions, but if the market price remains the same upon unlocking, these assets could be worth up to $525 million.

Coinbase is launching a pilot program to distribute $12,000 in USDC stablecoin to 160 low-income young adults in New York over five months, administered by GiveDirectly and funded by Coinbase. Each recipient gets $8,000 upfront, with the remainder distributed over time. The funds are sent to Coinbase wallets for withdrawal, bank transfer, or holding as crypto. The program aims to test the use of stablecoins for financial aid, exploring whether it can provide faster, cheaper, and more efficient payments than traditional welfare programs. It is also part of the broader "guaranteed basic income" movement.

Sources

• The New York Times
• Fox Business
• Bloomberg
• SEC
• CFTC Official Announcements
• Tether Transparency Report
• MicroStrategy Investor Relations
• Metaplanet Investor Relations
• Coinbase Official Announcements
• World Liberty Financial (Zack Witkoff, Token2049)
• IRS and Treasury Department Guidance
• Henley & Partners Report
• Forbes
• GiveDirectly

Disclaimer

This article is for informational purposes only and should not be considered financial advice. Please do your own research before making investment decisions.