Crypto market sheds $100B as US government shutdown fears spark BTC, ETH sell-off
The global crypto market lost roughly $100 billion as fears of a US government shutdown surged. Political disputes over Department of Homeland Security funding — led by Senate Democrats threatening to block appropriations — pushed prediction markets (Kalshi, Polymarket) to price a ~78–80% probability of a shutdown by Jan. 31, up sharply from under 10% three days earlier. Over about 24 hours, Bitcoin fell ~3.4% and Ether declined ~5.3%; exchanges reported more than $360 million in leveraged positions liquidated, with approximately $324 million in long positions closed. Broader geopolitical pressures — including tariff threats and US military movements in the Middle East — added to risk-off sentiment, helping safe-haven assets outperform crypto. The Crypto Fear & Greed Index dropped to extreme fear (20). Traders recalled last year’s 43-day shutdown when BTC fell from about $126k to below $100k, underlining how political and macro shocks can amplify crypto volatility. Key near-term implications for traders: elevated political risk is triggering rapid deleveraging and large liquidations, increasing short-term volatility and downside pressure on BTC and ETH until political clarity returns. Primary keywords: crypto market, US government shutdown, Bitcoin, Ether, liquidations. Secondary keywords: market capitalization, prediction markets, DHS funding, geopolitical tensions, tariffs.
Bearish
The news increases downside pressure on BTC and ETH. High-priced probability of a US government shutdown has triggered risk-off selling, rapid deleveraging and over $360 million of liquidations—mostly long positions—which directly pushes prices lower in the short term. Historical precedent (the prior 43-day shutdown coinciding with a large BTC drawdown) suggests political paralysis can amplify volatility and prolong declines until funding clarity emerges. Geo-political tensions and tariff threats add incremental risk, supporting safe-haven flows that further weigh on crypto. In the short term expect elevated volatility, higher liquidation risk for leveraged long positions, and a bias toward downside for BTC and ETH. Over the medium to long term the impact is conditional: if a shutdown is averted quickly and macro news stabilizes, markets may recover; a protracted shutdown or additional shocks could extend the bearish phase.