A funding bill blockade has been threatened by Senate Democrats if it contains allocations for the Department of Homeland Security, stoking fear among traders regarding a potential US government shutdown.
Approximately $100 billion was wiped from the crypto market late on Sunday, as uncertainty surrounding another potential partial US government shutdown caused traders to sell off.
A blockade of a critical funding package has been threatened by Senate Democrats should the legislation include allocations for the Department of Homeland Security (DHS). This ultimatum follows a Saturday incident in which federal agents fatally shot Alex Jeffrey Pretti, a 37-year-old ICU nurse, during an immigration enforcement operation in Minneapolis.
“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.
A contraction in the total crypto market cap from $2.97 trillion to $2.87 trillion was recorded by TradingView within a six-and-a-half-hour window ending Sunday at 9:30 pm UTC, resulting in a 3.4% decline for Bitcoin (BTC) over the last 24 hours.
Altcoins endured even more significant losses, with a 5.3% decline recorded for Ether (ETH), which fell to $2,866 over the last day.
In the past day, over $360 million worth of leveraged crypto positions have been flushed from the market, with $324 million in long positions liquidated, according to data from Gate.
Shutdown Risk Grows as End-of-January Deadline Nears
Odds of a US government shutdown by Saturday, Jan. 31, have been backed by up to 80% by bettors on prediction platforms Kalshi and Polymarket.
On the prediction platform Kalshi, odds of a government shutdown by Jan. 31 surged from below 10% on Saturday to 78.6% on Sunday, while a similar spike to 80% was shown by Polymarket’s odds.
Market anxiety has been further heightened by US President Donald Trump’s ultimatum to impose 100% tariffs on Canada if a trade deal is finalized with China, alongside the US military’s deployment of a naval “armada” to the Middle East as tensions with Iran escalate.
Crypto Prices Slumped During the Previous Government Shutdown
Market performance during US government shutdowns is freshly remembered by crypto investors.
A retreat from an all-time high of $126,080 to levels below $100,000 was experienced by Bitcoin during the record 43-day US government shutdown from Oct. 1 to Nov. 12, driven by persistent political discord in Washington and an Oct. 10 market crash partially ignited by Trump’s tariff threats against China.
Since Oct. 10, gold has strongly outperformed Bitcoin, suggesting that traditional safe-haven assets continue to be favored by most investors during periods of heightened geopolitical and macroeconomic uncertainty.
Meanwhile, a five-point drop to 20 out of 100 was recorded for the Crypto Fear & Greed Index on Monday, marking a six-day streak for the sentiment tracker within the “extreme fear” zone.
