Bitcoin Falls as U.S. Shutdown Sparks Liquidity Crisis
Bitcoin fell sharply as the U.S. government shutdown entered day 36, triggering a liquidity crisis. The freeze of over $200 billion in the Treasury General Account (TGA) drained market cash, pushing the SOFR rate to 4.22% and Fed SRF usage to $50.35 billion. This funding shortage squeezed credit markets: commercial real estate CMBS defaults hit 11.8%, and subprime auto delinquencies neared 10%. Bitcoin slid below $100,000, sparking $20 billion in liquidations. Traders remain divided: bears warn the TGA freeze will keep tightening liquidity until the Nov. 2 Quarterly Refunding Announcement releases funds, while bulls anticipate a post-shutdown fiscal and Fed easing wave to reverse the squeeze. In the short term, Bitcoin volatility will hinge on the shutdown’s duration. In the longer term, this liquidity crisis may set the stage for renewed monetary expansion and market relief.
Bearish
The ongoing U.S. government shutdown has frozen over $200 billion in the TGA, creating a severe liquidity crisis that has driven funding rates to crisis highs and sparked massive liquidations. Bitcoin’s price decline and sub-$100K slump reflect this squeeze. In the short term, continued TGA constraints and elevated funding costs threaten further price pressure, making bearish sentiment dominant. Although traders anticipate that post-shutdown fiscal spending and Fed easing could revive liquidity and support a rebound, this relief remains uncertain. Consequently, the overall impact on Bitcoin prices is bearish.