A “data blackout” in the US has thrown crypto markets into a “risk-off” spiral, sparking a $610 million liquidation cascade that dragged Bitcoin down to the $100,000 support level.
A “data blackout” in the US has thrown crypto markets into a “risk-off” spiral, sparking a $610 million liquidation cascade that dragged Bitcoin down to the $100,000 support level.
The crisis began after the US government confirmed that the important October employment and inflation data would not be released due to the recent shutdown. The gap leaves markets and the Federal Reserve without their regular reference points just as the Fed is evaluating policy ahead of year-end.
When there is a lack of key economic news, assets that normally react to that news become unstable. Trading becomes more about emotion than facts, the pool of active buyers and sellers shrinks, and a large number of automatic sell orders can quickly lead to a wave of forced liquidations.
With no October CPI or jobs prints, derivative markets have started pricing in a much lower probability of a December rate cut, taking away a major source of optimism that had been supporting crypto prices throughout October.
For instance, that the Fed will cut interest rates by 25 basis points, which is down notably from a 90% chance in late October.
This uncertainty has created a trader’s nightmare. When key economic data is missing, trading becomes driven by emotion rather than fundamentals, liquidity thins, and automated sell-offs can cascade.
The crypto market, which had been trading on a narrative of institutional adoption, is now seeing that thesis fail. In a stark display of this disconnect, Spot Bitcoin ETFs recorded a massive on Tuesday, yet the price failed to rally and continued to move sideways.
This mismatch suggests that large traders are likely pulling back and waiting for a clearer signal before making big moves.
With the Fed “making decisions in the dark,” traders are scrambling to find alternative data. What they are finding is not encouraging.
planned job cuts
Ultimately, with the Fed lacking key indicators and crypto markets remaining highly leveraged, any strengthening of the US dollar, shift toward risk aversion, or selling pressure in derivatives can cause prices to swing wildly.
Until we get clear economic reports again, the market is likely set up for sudden and severe drops.
