US Shutdown Delays Economic Reports, Fuels Uncertainty

The United States federal government shutdown at 12:01 AM ET on October 1, 20205. The Senate lawmakers failed to agree on short-term budget measures, which created a new wave of uncertainty across the traditional and digital markets. The shutdown occurred after a standoff between the Republicans and Democrats. The disagreement on the short-term budget measures paused multiple non-essential government operations and suspended the crucial economic data release.

Economic Data Delayed Due to Shutdown

The delayed economic data includes the September non-farm payroll report. The report is a key indicator of labor market health. Analysts had already noted deteriorating job growth over the summer, raising concerns that the absence of timely figures could undermine investor confidence.

“This is a harmful disruption to the basic functioning of our democracy and to federal employees who serve the public every day,” said Max Stier, President and CEO of the Partnership for Public Service. “It undermines public trust in government and restricts access to vital services at a time of economic uncertainty,” he added.

Important Reads: Top Crypto Exchanges in the USA

The shutdown’s impact extends beyond public services to financial markets, which rely heavily on economic data to gauge momentum. With labor and inflation indicators delayed, analysts warn of increased volatility in asset pricing, particularly in risk-sensitive sectors.

Market experts say that Bitcoin (BTC) and Ethereum (ETH) could witness bigger price swings, even though major cryptocurrency exchanges like Coinbase and Binance haven't made any official remarks yet. In the past, government shutdowns have caused small increases in Bitcoin volatility.

For example, in January 2019, some investors saw crypto as a way to protect themselves from political problems. CoinMarketCap says that as of early Tuesday, Bitcoin is worth $114,506.18 and has a market valuation of $2.28 trillion. This is a 0.47% daily rise.  Ethereum is still solid, but analysts warn that both assets could have problems if the outage goes on for too long.

Coincu's research shows that after the government starts working again, there may be stricter rules, as officials may want to make the economy more stable after long periods of disruption. At the same time, new developments in decentralized finance (DeFi) could give investors other ways to be strong.

If the deadlock goes on, delays in economic reporting could make it harder for both investors and governments to make decisions. For now, the markets are in a wait-and-see mode. Crypto traders are especially interested in how long the budget deadlock might affect risk appetite in the next weeks.