Crypto market loses $100B as fears of a US government shutdown sparked broad selling across digital assets.
Bitcoin and Ether led losses as traders reduced risk and shifted toward safer assets.
The global crypto market saw sharp declines over the weekend as political uncertainty in Washington unsettled investors.
Market capitalization fell by about $100 billion as selling pressure intensified across major tokens. The pullback followed rising concerns that funding talks in Congress could fail, forcing a partial government shutdown.
Political gridlock weighs on crypto sentiment
Concerns grew after Senate Democrats warned they could block spending bills tied to Department of Homeland Security funding. Party leaders signaled opposition if the legislation failed to address immigration enforcement issues. Senate Democratic Leader Chuck Schumer said he would vote against advancing the bill under the current terms.
The warning increased fears that lawmakers could miss funding deadlines. Investors responded by trimming exposure to risk assets, including cryptocurrencies. The situation unfolded alongside reports of a fatal law enforcement incident in Minneapolis, which added to political tension.
Market participants viewed the standoff as another sign of policy instability. Crypto assets often react sharply to such events due to their sensitivity to global risk sentiment. As uncertainty rose, traders moved funds into cash and traditional safe havens.
Prices slide as liquidations accelerate
Market data showed a swift drop in valuations within hours. Total crypto capitalization fell from about $2.97 trillion to $2.87 trillion within roughly six hours by Sunday evening. Bitcoin dropped 3.4% over 24 hours, while Ether slid more than 5%.
The selloff triggered heavy liquidations across derivatives markets. Data from Gate showed more than $360 million in leveraged positions closed during the period. Long positions accounted for about $324 million of that total, reflecting bullish bets unwinding quickly.
Prediction markets also reflected rising anxiety. Traders on Kalshi and Polymarket priced in around an 80% chance of a shutdown by Saturday, January 31. On Kalshi, shutdown odds jumped from below 10% on Saturday to nearly 79% on Sunday.
Global risks add pressure
Wider geopolitical concerns added to market stress. Investors reacted to reports that US warships moved toward the Middle East amid rising tensions with Iran. At the same time, recession fears resurfaced after President Donald Trump warned of possible 100 percent tariffs on Canada.
These factors reinforced a risk-off mood across global markets. Crypto assets, often treated as high-volatility investments, saw heavier selling than traditional markets.
Past shutdowns offer a cautionary reference. During last year’s 43-day shutdown from October 1 to November 12, Bitcoin fell sharply from a record high of $126,080 to near $100,000. Trade tensions and broader market shocks amplified those losses.
Current conditions suggest similar sensitivity as traders remain alert to political outcomes. While negotiations continue, crypto markets appear vulnerable to further swings until funding clarity emerges.
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