The prospect of a partial shutdown of the U.S. federal government has raised concerns among bitcoin traders, although this situation is expected to have a limited impact on the market compared to previous shutdowns. Unlike the extensive 43-day shutdown experienced last year, the current scenario involves only a fraction of the government’s operations potentially halting, which could cushion the blow to bitcoin prices.
Current data indicates that six out of twelve spending bills have already been approved, and historical trends suggest that around 60% of shutdowns are resolved just before their deadlines. As a result, the bitcoin market seems to be anticipating a scenario that could mitigate disruptions.
Betting platforms, such as Polymarket, report a 75% probability of a shutdown occurring by January 31, with total bets exceeding $13.3 million. The ongoing stalemate revolves around the Democrats’ refusal to support the Department of Homeland Security (DHS) funding bill, with Senate Minority Leader Chuck Schumer explicitly stating his opposition to any funding for ICE until significant reforms are made.
If negotiations fail by midnight on January 30, many federal agencies will cease operations. This potential partial shutdown is markedly different from last year’s situation, where the blockage of all 12 appropriations bills culminated in a lengthy and damaging closure. This time around, various departments—including Agriculture, Veterans Affairs, Commerce, and Energy—have secured full-year funding, and DHS possesses approximately $178 billion from last year’s “One Big Beautiful Bill Act,” allowing for continued operations without major interruptions.
Market analyst known as “CryptoOracle,” who accurately predicted the previous shutdown, previously noted that a full government shutdown could significantly disrupt liquidity in both the traditional and crypto markets. He predicted a sharp correction in bitcoin’s price, estimating a drop of 30–40% and setting a downside target within the range of $65,000 to $75,000. However, the current partial shutdown scenario may not exert the same liquidity pressures on the markets.
During last year’s extensive shutdown, the Treasury General Account (TGA) swelled to $1 trillion, draining around $700 billion from liquidity and negatively impacting risk assets. In contrast, with half of the appropriations already funded in this instance, the anticipated TGA buildup would be less severe, suggesting a more stable environment for bitcoin and other markets.
In the realm of politics, last-minute compromises have historically resolved many shutdown crises. An analysis indicates that only three out of five crises from 2013 to 2023 resulted in actual shutdowns, illustrating a high likelihood of last-minute deals. Analysts cite various factors that could lead to a compromise, including the potential for Republicans to separate DHS funding from other appropriations and the willingness of some Democrats to negotiate if strict border provisions are eliminated. The economic implications of a week-long shutdown—costing an estimated $4 to $6 billion and resulting in 2–3% market drops—add pressure on both sides to reach an agreement.
As for bitcoin, the currency has seen $1.33 billion in net outflows for spot ETFs during the week ending January 23. However, analysts suggest that these movements are influenced by a range of factors, including the Federal Reserve’s rate decisions and earnings reports from major tech companies, rather than shutdown anxieties alone. Bitcoin is currently trading at $89,177, up 0.9% over the past 24 hours, but remains about 29% below its all-time high of $126,000 reached last October.
