Roughly $100 billion was erased from the cryptocurrency market late on Sunday as rising geopolitical tensions and renewed fears of a U.S. government shutdown triggered a broad selloff across digital assets.
Market anxiety intensified after Senate Democrats warned they would block a government funding bill if it included financing for the Department of Homeland Security. The threat raised concerns among traders that the United States could face another partial shutdown in the coming days.
Democrats said they were seeking changes to the DHS funding proposal following a fatal shooting involving federal agents in Minneapolis over the weekend. Senate Majority Leader Chuck Schumer said his party would not support moving forward with the appropriations bill if DHS funding remained part of the package.
Crypto market slides sharply
According to data from TradingView, total crypto market capitalization fell from about $2.97 trillion to $2.87 trillion within six and a half hours, as of 9:30 pm UTC on Sunday.
Bitcoin dropped 3.4% over the past 24 hours, while altcoins suffered steeper losses. Ether slid 5.3% during the same period, underperforming the broader market.
Leverage also unwound rapidly. More than $360 million worth of leveraged crypto positions were liquidated in the past day, with long positions accounting for roughly $324 million, according to data from Gate.
Shutdown odds surge on prediction markets
Expectations of a U.S. government shutdown climbed sharply on prediction platforms Kalshi and Polymarket. Traders on both platforms priced the probability of a shutdown by Saturday, January 31, at close to 80%.
Kalshi showed shutdown odds jumping from under 10% on Saturday to nearly 79% on Sunday, while Polymarket reflected similar levels of concern.
Adding to market unease, Donald Trump warned he could impose tariffs of up to 100% on Canada if it moves forward with a trade agreement with China. At the same time, reports of U.S. warships being deployed to the Middle East amid rising tensions with Iran further weighed on investor sentiment.
Crypto weakness echoes last shutdown
Investors remain mindful of how digital assets performed during previous U.S. government shutdowns. During the record 43-day shutdown from October 1 to November 12, Bitcoin fell sharply from record highs to below $100,000, amid political gridlock and heightened trade tensions.
Since early October, gold has significantly outperformed Bitcoin, reinforcing the view that investors continue to favor traditional safe-haven assets during periods of geopolitical and macroeconomic stress.
Meanwhile, the Crypto Fear & Greed Index dropped five points on Monday to 20 out of 100, extending a six-day streak in the “extreme fear” zone and underscoring the fragile state of market sentiment.
