🚨BIG WARNING: THE BIGGEST THREAT TO CRYPTO IS BACK.
$BANK The probability of a US government shutdown by January 31 has exploded to nearly 80%.
Just a day ago it was only around 10%-15%.
And this is a serious liquidity risk for crypto.
Democrats have made it clear they will block the spending bill unless key DHS funding provisions are removed and Republicans are not backing down which means a shutdown is now a real possibility.$B2
And here is the dangerous part:
The debt ceiling has already been raised to $41.1 trillion.
That means politicians can afford to fight longer without instantly breaking government operations which actually increases the chance of a shutdown.$RIVER
But if that's the case why would crypto suffer?
When a shutdown starts the US Treasury usually rebuilds its Treasury General Account (TGA). To do that, it pulls money out of financial markets.
Last time this happened, the TGA increased by about $220 billion. That was a $220B liquidity drain from markets and crypto cannot handle that.
Last shutdown cycle:
• Markets pumped for a short time
• Liquidity dried up
• Then crypto collapsed
• BTC and ETH dropped 20%-25%
• Altcoins dropped much more
And one of the biggest factors behind this was the liquidity crisis.
This time, the setup is even worse.
• Liquidity is already thin.
• Market confidence is already weak.
• Institutions are mostly in stocks and gold.
• Volatility is already high
Crypto is already swinging violently on small flows.
A shutdown-driven liquidity drain could be devastating and result in an even more brutal dump.
#marketcrash