Crypto Market Sheds $100B on US Shutdown and Geopolitical Fears
Roughly $100 billion was erased from the cryptocurrency market late Sunday as concerns over a potential partial United States government shutdown prompted a broad sell-off. The pullback followed a warning from Senate Democrats that they would block a funding package if it includes allocations for the Department of Homeland Security, which oversees Immigration and Customs Enforcement, after federal agents fatally shot a man in Minneapolis on Saturday.
Senate Majority Leader Chuck Schumer said Democrats had sought reforms to the Department of Homeland Security’s spending plan but deemed the proposal inadequate to limit ICE’s actions, adding he would vote against it. He also said Democrats would withhold support for advancing the broader appropriations package if DHS funding remains included.
Market data from TradingView shows total crypto market capitalization fell from $2.97 trillion to $2.87 trillion within six and a half hours by Sunday at 9:30 pm UTC. Bitcoin (BTC) declined 3.4% over the last 24 hours, while Ether (ETH) dropped 5.3% over the same period. More than $360 million in leveraged crypto positions were liquidated in the past day, including $324 million in long positions, according to Gate.
Odds of shutdown by end of January rise
Prediction platforms Kalshi and Polymarket reflected sharply higher probabilities of a government shutdown by Saturday, Jan. 31, reaching as high as 80%. On Kalshi, the odds climbed from below 10% on Saturday to 78.6% on Sunday, while Polymarket showed a similar move to 80%.
Odds of a US government shutdown by Saturday, Jan. 31, are at 80% on Polymarket.
Investor sentiment was further pressured after U.S. President Donald Trump said he would raise tariffs on Canada to 100% if the country reaches a deal with China, and as the U.S. military deployed warships to the Middle East amid rising tensions with Iran.
Crypto prices fell during the last shutdown
During the 43-day U.S. government shutdown from Oct. 1 to Nov. 12, Bitcoin dropped from its all-time high of $126,080 to below $100,000. The decline was influenced by extended policy disputes in Washington and the Oct. 10 crypto market sell-off, which was partly attributed to Trump’s tariff threats involving China.
Bitcoin’s change in price during the last US government shutdown. Source: CoinGecko
Since Oct. 10, gold has significantly outperformed Bitcoin, indicating investors have favored traditional safe-haven assets during periods of heightened geopolitical and macroeconomic uncertainty.
The Crypto Fear & Greed Index, which tracks sentiment across Bitcoin and the broader crypto market, fell five points on Monday to 20 out of 100, marking six consecutive days in the “extreme fear” zone.
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