XRP and Dogecoin Surge as U.S. Shutdown and Japan Bond Market Strains Fuel Bitcoin Demand

Key Points:

• Bitcoin gained more than 3% to $118,700, while Dogecoin and Solana outperformed with near double-digit daily rallies.

• Traders expect U.S. fiscal uncertainty and rising Japanese yields to encourage looser global liquidity conditions.

• The digital asset market capitalization climbed above $2.37 trillion, signaling resilience despite macroeconomic stress.

Crypto Rallies Despite Global Market Strains

A looming U.S. government shutdown and renewed stress in Japan’s bond market failed to unsettle digital assets this week, as cryptocurrencies rallied on expectations that policymakers could be pushed toward easing financial conditions.

Bitcoin (BTC) rose 3.1% to $118,700, extending its year-to-date gains to nearly 42%, while Ethereum (ETH) climbed 5.6% to $4,374. Solana (SOL) advanced 7% to $223, and Dogecoin (DOGE) jumped almost 9% to $0.25, outpacing most majors. XRP (XRP) steadied at $2.97, holding near the psychological $3.00 level after volatile swings earlier in the week.

The broad rally lifted the overall digital asset market capitalization above $2.37 trillion, according to CoinMarketCap, reinforcing the sector’s resilience at a time when traditional financial markets are navigating uncertainty.

Shutdowns and Policy Uncertainty

Shutdowns that delay U.S. government data and weaken fiscal visibility often make central banks more cautious in setting policy. The potential postponement of September’s payrolls report has heightened speculation that the Federal Reserve may adopt a more accommodative stance.

“The U.S. government shutdown and weak employment numbers from ADP have impacted markets this past week. Traders believe that these catalysts could be making a case for the Fed to further stimulate the economy and cut rates through the rest of the year, which could boost stocks and cryptocurrencies,” said Jeff Mei, COO at BTSE, in a Telegram note.

Meanwhile, in Japan, yields on 10-year government bonds climbed to their highest levels since 2008, signaling pressure on the Bank of Japan to adjust its ultra-loose monetary policy. Rising yields there have raised concerns over global funding costs, adding another layer of uncertainty for investors.

Investor Sentiment and Market Dynamics

For crypto traders, these crosscurrents are being interpreted less as threats and more as opportunities. With volatility in equities and bonds subdued, digital assets are attracting inflows as investors search for higher returns and diversification.

“The major theme this quarter is lower implied volatilities across equities, rates, FX, and even BTC,” said Augustine Fan, Head of Insights at SignalPlus, in an email. “This has been driven by a collapse in realized volatilities thanks to an accommodative Fed, stabilizing global GDP, lack of significant tariff-passthroughs on CPI readings, and a flattening of geopolitics and tariff surprises.”

This shift in psychology has allowed Bitcoin to consolidate near $119,000 without significant selling pressure, while speculative assets like Dogecoin and Solana see renewed momentum. XRP, despite its legal overhangs and volatility, remains firmly bid above $2.90, suggesting investors are positioning for further upside.

Outlook for Crypto Amid Policy Shifts

The rally in digital assets underscores the market’s growing independence from short-term macro risks. Traders are increasingly betting that structural liquidity — from central banks managing fiscal strains in the U.S. and yield spikes in Japan — will sustain demand for scarce digital assets.

Whether this decoupling holds will depend on how aggressively policymakers respond in the months ahead. For now, crypto’s ability to rally amid fiscal stress and bond market volatility highlights its evolving role as both a speculative instrument and, increasingly, a hedge against policy uncertainty.