Deep Dive 9/29/2025

Executive SummaryThe Bitcoin market is at a juncture, defined by a divergence between acute short-term macroeconomic risks and profoundly positive long-term structural developments. The immediate outlook is dominated by the high probability of a U.S. government shutdown, as last-minute negotiations between the White House and congressional leaders have collapsed. This event introduces significant potential volatility for all risk assets. A new and material risk factor is the directive for federal agencies to plan for permanent mass layoffs, elevating the shutdown from a temporary political disruption to a potential structural economic shock. The market’s ability to navigate the impending macroeconomic event while defending the recent price low near $108,700 will determine if a durable bottom is in place.I. Current Market Dynamics: Price Recovery and On-Chain ResetTechnical Outlook and Price ActionFollowing a deleveraging event at the end of the prior week, Bitcoin has undergone a technical recovery. This bounce occurred on lower trading volume, suggesting it may be a relief rally driven by an absence of sellers rather than strong new buying pressure.• 24-Hour Range: The price established a low of $109,213.5 and a high of $112,355.8.• Key Support: The primary support level to watch is the recent low established near $108,700. A failure to hold this level could trigger a deeper price correction.• Key Resistance: The Short-Term Holder (STH) cost basis, now at approximately $112,100, has flipped from a support level into the first line of overhead resistance. Reclaiming this level is critical for a sustained recovery. Further resistance is anticipated around $115,000 and $117,000.• Momentum Indicators: The Moving Average Convergence Divergence (MACD) indicator has crossed into negative territory, a signal that can precede periods of consolidation or further downside.On-Chain Analysis: A “Market Reset”On-chain analytics firm Glassnode describes the recent price correction as a “market reset,” characterized by the capitulation of short-term speculators.• Short-Term Holders (STHs) at a Loss: The Net Unrealized Profit/Loss (NUPL) for STHs (entities holding Bitcoin for less than 155 days) has fallen into negative territory. This indicates that, in aggregate, the newest market participants are holding their positions at an unrealized loss.• Potential for Further Capitulation: As of the latest data, 36% of STHs remain in a profitable position. During previous corrections in this cycle, this metric has fallen below 5% to mark a local bottom, suggesting there is potential for another downward move to force the final exit of these participants.• Bifurcated Scenario: A price move below recent lows could trigger a final capitulation event, creating a durable market bottom by transferring assets to long-term holders. Conversely, a sustained move back above the ~$112,100 STH cost basis would restore recent buyers to profitability, potentially trapping sellers and igniting a short squeeze.II. Macroeconomic Headwinds: Impending U.S. Government ShutdownThe primary driver of near-term risk sentiment across global markets is the high probability of a U.S. government shutdown, with the funding deadline set for October 1.Collapse of NegotiationsThe prospect of a last-minute deal has effectively ended after President Donald Trump canceled a scheduled meeting with the four top congressional leaders on September 29.• President Trump’s Justification: In a social media post, the president stated that no meeting could be “productive” due to what he termed the “unserious and ridiculous demands” from Democratic leaders.Core Political ImpasseThe fundamental disagreement preventing a funding agreement remains unchanged.• Democratic Demands: Leaders insist that any short-term funding bill must include extensions for Affordable Care Act (ACA) subsidies and a reversal of recent Medicaid funding cuts.• Republican Position: The White House and Republican leadership have rejected these conditions, demanding a “clean” funding bill without any additional policy provisions.A Shift in Economic Risk: The Threat of Permanent LayoffsA significant development has altered the potential economic impact of a shutdown. The White House’s Office of Management and Budget (OMB) has instructed federal agencies to create plans for permanent mass layoffs in the event of a funding lapse. This transforms the event from a historically transient political issue into a potential structural economic event that could negatively impact U.S. GDP, consumer confidence, and corporate earnings.III. A New Era in U.S. Regulation: The SEC-CFTC Harmonization InitiativeOn September 29, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) held a joint public roundtable, signaling a significant shift away from “regulation by enforcement” towards a collaborative approach. The agencies ...