❗ US on the brink of a new shutdown on January 31: Bitcoin reacted with a drop
• The conflict over funding for the Department of Homeland Security has escalated in Congress. Democrats are ready to block the budget, while Republicans refuse to make concessions.
• If the parties fail to reach an agreement, federal government funding will expire on January 31. Betting platforms give an 80% chance of a shutdown.
• The House of Representatives has already left Washington before the deadline. Any changes to the budget require a new vote.
• Bitcoin fell to $86,000, then recovered to ~$87,600.
• The last shutdown (October-November 2025) lasted 43 days, making it the longest in US history. Bitcoin fell below $100,000, the SEC operated with a skeleton staff and was unable to approve new crypto ETFs.
During a government shutdown, the government stops spending money, and it is "frozen" in Treasury accounts. This sucks liquidity out of the markets. Less money in the system means pressure on risky assets, including BTC.
