Approximately $100 billion was wiped from the cryptocurrency market late Sunday as uncertainty over the possibility of another partial U.S. government shutdown caused traders to sell.
Senate Democrats threatened to block the funding measure if it included money for the Department of Homeland Security, which oversees Immigration and Customs Enforcement, after a federal agent shot and killed a man in Minneapolis on Saturday.
“Democrats called for common-sense reforms to the Department of Homeland Security spending bill, but because Republicans refused to stand up to President Trump, the DHS bill falls woefully short on curbing ICE abuses. I will vote no,” said Senate Democratic Leader Chuck Schumer.
He added, “Senate Democrats will not provide the votes to move forward on a spending bill if a DHS funding bill is included.”
The market capitalization of cryptocurrencies fell from $2.97 trillion to $2.87 trillion in the six-and-a-half hours ending at 9:30pm UTC on Sunday, with Bitcoin (BTC) down 3.4% over the past 24 hours, according to TradingView data.
Altcoins were hit even harder, with Ethereum (ETH) down 5.3% over the past day.
According to Gate data, $360 million worth of leveraged cryptocurrency positions were flushed and $324 million worth of long positions were liquidated in the past day.
Increased probability of closure by end of January
Bettors on prediction markets Calci and Polimarket support up to 80% probability that the US government will be shut down by Saturday, January 31st.
Calci’s odds for a government shutdown by January 31st jumped from less than 10% on Saturday to 78.6% on Sunday, while Polymarket’s odds rose to 80% as well.
U.S. President Donald Trump’s threat to raise tariffs on Canada to 100% if a deal is reached with China and the U.S. military’s dispatch of warships to the Middle East amid rising tensions with Iran also added to traders’ fears of an economic downturn.
Cryptocurrency prices fell during the last shutdown
Cryptocurrency investors are fresh in their minds about how market prices have performed during the U.S. government shutdown.
During the record 43-day US government shutdown from October 1st to November 12th, Bitcoin fell from an all-time high of $126,080 to less than $100,000. This was partly due to long-standing disagreements in Washington, but also the October 10 cryptocurrency market crash, triggered in part by President Trump’s threat to impose tariffs on China.
Related: US Bitcoin ETF loses $1.72 billion in 5 consecutive days of outflows
Gold has significantly outperformed Bitcoin since October 10, suggesting that most investors continue to favor traditional safe-haven assets amid heightened geopolitical and macroeconomic uncertainty.
Meanwhile, the Crypto Fear & Greed Index, which tracks Bitcoin and crypto market sentiment, fell five points on Monday to 20 out of 100, marking the sixth straight day in the “extreme fear” zone.
magazine: A “tsunami” of wealth is headed towards cryptocurrencies: Nansen’s Alex Svanevik
