Around $100 billion was wiped from the crypto market late on Sunday, as uncertainty around another potential partial US government shutdown caused traders to sell off.
Senate Democrats threatened to block a funding package if it included money for the Department of Homeland Security, which oversees Immigration and Customs Enforcement, after federal agents shot and killed a man in Minneapolis on Saturday.
“Democrats sought common sense reforms in the Department of Homeland Security spending bill, but because of Republicans’ refusal to stand up to President Trump, the DHS bill is woefully inadequate to rein in the abuses of ICE. I will vote no,” said Senate Democrat Leader Chuck Schumer.
“Senate Democrats will not provide the votes to proceed to the appropriations bill if the DHS funding bill is included,” he added.
TradingView data shows the crypto market cap dropped from $2.97 trillion to $2.87 trillion in six and a half hours by Sunday at 9:30 pm UTC, pushing Bitcoin (BTC) down 3.4% over the last 24 hours.
Altcoins were hit even harder, with Ether (ETH) down 5.3% in the last day.
Over $360 million worth of leveraged crypto positions have also been flushed in the past day, with $324 million worth of long positions liquidated, Gate data shows.
Odds of shutdown by end of January rise
Bettors on prediction markets Kalshi and Polymarket have backed up to 80% odds of the US government shutting down by Saturday, Jan. 31.
Odds on Kalshi of a government shutdown by Jan. 31 surged from below 10% on Saturday to 78.6% on Sunday, while Polymarket’s odds showed a similar surge to 80%.
Adding to traders’ fear of a downturn was US President Donald Trump threatening to raise tariffs on Canada to 100% if the country strikes a deal with China, and the US military deploying warships to the Middle East amid rising tensions with Iran.
Crypto prices fell during the last shutdown
Crypto investors have a fresh memory of how market prices fare during US government shutdowns.
During the record 43-day US government shutdown spanning from Oct. 1 to Nov. 12, Bitcoin fell from its all-time high of $126,080 to below $100,000, driven in part by prolonged disagreements in Washington but also the Oct. 10 crypto market crash, which was in part sparked by Trump’s tariff threats with China.
Related: US Bitcoin ETFs bleed $1.72B in five-day outflow streak
Since Oct. 10, gold has strongly outperformed Bitcoin, suggesting that most investors continue to favor traditional safe-haven assets during heightened geopolitical and macroeconomic uncertainty.
Meanwhile, the Crypto Fear & Greed Index, tracking Bitcoin and crypto market sentiment, fell five points on Monday to 20 out of 100, marking six days straight stuck in the “extreme fear” zone.
Magazine: A ‘tsunami’ of wealth is headed for crypto: Nansen’s Alex Svanevik
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