Crypto market dips as U.S. government shutdown fears, ETF outflows and Clarity Act delays weigh
The crypto market fell about 2% on Feb. 10 as investor anxiety rose over a potential partial U.S. government shutdown scheduled for Feb. 13. Bitcoin traded between $68,400–$71,000 and was down ~2.4% on the day near $69,400, while Ethereum hovered just above $2,000 and had extended weekly losses to about 12%. Broader market weakness in tech stocks, gains in safe-haven assets and nearly $300 million in recent crypto liquidations (mostly long liquidations) added pressure. Policymaking risks intensified sentiment: delays to the Clarity Act — a key crypto market-structure bill — and concerns about Kevin Warsh’s monetary-policy stance have eroded risk appetite. Institutional demand remained inconsistent: U.S. spot Bitcoin ETFs recorded only $145 million in net inflows on Monday, a 60% drop from Friday, with month-to-date flows negative and three consecutive months of outflows totaling over $6 billion. Traders faced short-term volatility from liquidation cascades and soft ETF demand; longer-term uncertainty stems from regulatory delays and macro risks tied to a potential shutdown and Fed policy outlook.
Bearish
The immediate market reaction is bearish. A credible near-term risk—the potential partial U.S. government shutdown—raises uncertainty around economic data flow and the Federal Reserve’s ability to assess policy, which historically suppresses risk assets including crypto. Regulatory uncertainty from delays to the Clarity Act further reduces investor risk appetite because it postpones clarity on market structure and enforcement. Weak institutional demand (sharp drop in spot BTC ETF inflows and sustained monthly outflows) removes a stabilizing source of capital. The roughly $300 million of recent liquidations (mainly long liquidations) increases short-term volatility and can amplify downside moves via cascade liquidations. Together, these factors point to elevated short-term downside risk and range-bound or declining prices until either the shutdown risk subsides, ETF flows resume positively, or regulatory clarity improves. In the longer term, if the Clarity Act or clearer regulatory signals arrive and institutional inflows return, sentiment could recover; absent that, prolonged regulatory delays and macro uncertainty may keep the market muted. Similar episodes: prior shutdown-related data vacuums and regulatory delays (e.g., 2025 shutdown effects and repeated ETF flow swings) produced short-term sell-offs followed by recovery only after clarity or renewed inflows.