INTERNAL MEMO: Trading Desk, October 2, 2025
INTERNAL MEMO: Trading Desk, October 2, 2025
FROM: Risk Management
TO: All Traders
RE: Why You're All Wrong About Yesterday
Let's start with what you got right: you bought. The S&P closed at 6,711.20, another record. The Nasdaq pushed to 22,755. The government shut down at midnight and you treated it like white noise. Good instincts.
But let me tell you what you missed while you were celebrating those print statements and patting yourselves on the back for "buying the shutdown."
Bitcoin sat at $114,540 yesterday, up 0.6%. Ethereum slipped 1.1% to $4,139. The entire crypto market cap barely twitched—up 0.2% to $4 trillion. Look at that number again. Four. Trillion. Dollars. That's roughly the GDP of Germany sitting in digital tokens, and it moved less than the margin of error while the largest economy on Earth turned off the lights and sent everyone home.
You know what that tells me? Decoupling is complete. Not theoretical anymore. Not "eventually" or "in the long run." It happened. Right under your noses. While you were obsessing over whether Friday's NFP would print or get delayed, while you were gaming out Fed cuts and checking Treasury yields, the crypto market stopped caring entirely about the machinery of government.
Bitcoin's consolidating between $108K and $118K. That's a ten-thousand-dollar range that feels like a rounding error now. Remember when a $1,000 swing in BTC would send shockwaves through equity volatility? Now it's hovering above six figures and the correlation to traditional risk assets is approaching zero. The VIX barely moved. Gold did nothing. The dollar weakened but not enough to explain crypto's indifference.
Here's what should concern you: the Nasdaq gained 11.2% in Q3, the S&P 7.8%, the Dow 5.2%. Magnificent quarter. Everyone's long, everyone's positioned for more cuts, more liquidity, more of the same upward grind. And crypto? Sitting there at $114K like it's waiting for something else entirely.
What's it waiting for? Not Fed policy. Not government funding battles. Not even macro data anymore. The shutdown should matter to crypto—less regulatory oversight, delayed SEC decisions, disrupted enforcement. But the market shrugged. Because crypto has built its own parallel financial system now, and the plumbing works whether or not Congress can pass a continuing resolution.
You want to know the real risk? It's not that crypto crashes when equities crash. We've seen that movie. 2022 taught us leverage kills everything. The real risk is that crypto rallies when equities crash, and suddenly every pension fund, every sovereign wealth fund, every institution that wrote it off as "digital gold but worse" has to reconsider their entire portfolio construction.
Case-Shiller showed home prices declined 0.3% in July. Nobody cared. ADP printed -32,000 jobs. Markets rallied. The government shut down. New highs. See the pattern? Bad news is good news as long as it means more cuts. But Bitcoin doesn't need more cuts. It's already past the point where monetary policy is the primary driver.
XRP is consolidating around $3 after pulling back from $3.66. Think about that. XRP—the token everyone said was dead because of the SEC lawsuit—is trading at three dollars. And the government shutdown, which in theory delays regulatory clarity even further, did absolutely nothing to it.
You're all positioned for the same trade: long equities, long duration, short volatility, expecting the Fed to cut 25-50 basis points by year-end, expecting the shutdown to resolve in days not weeks, expecting data to cooperate enough to justify dovish policy without triggering recession fears. It's the most crowded trade since the tech bubble, and you know it.
But crypto's price action is telling you something different. It's telling you there's a growing pool of capital that doesn't care about the Fed dot plot, doesn't care about Senate votes, doesn't care whether Powell sounds hawkish or dovish at the next presser. That capital lives in a different universe now. One where $4 trillion can exist in a parallel market structure and generate its own gravity.
The question isn't whether this is a bubble or whether crypto "deserves" these valuations. The question is: what happens when the next tranche of institutional money realizes they're fighting over scraps in equity markets while an entire asset class worth trillions sits just outside their mandates?
Yesterday was a record close for stocks. It was also the day the government shut down and crypto didn't flinch. You think those two facts are unrelated. I think they're the same fact viewed from different angles.
Adjust your risk models accordingly.
END MEMO