The crypto market came under pressure after renewed concerns over a potential partial US government shutdown, triggering a sharp sell-off across major digital assets. Bitcoin fell 3.4%, while Ethereum dropped 5.3%, as investors reacted to political uncertainty and rising macro risks.
Total crypto market capitalization declined by nearly $100 billion within hours, falling from around $2.97 trillion to $2.87 trillion. The sell-off led to over $360 million in leveraged liquidations, largely affecting long positions, as volatility spiked across derivatives markets.
Ethereum futures on the CME remained open with a modest $2.9K gap, while prediction markets now price a 78–80% probability of a US shutdown by the end of January. Broader risk sentiment was further pressured by geopolitical concerns and tariff-related uncertainty, pushing the Crypto Fear & Greed Index down to 20, signaling extreme fear.
Market analysts say the reaction reflects heightened sensitivity to political and macroeconomic developments rather than crypto-specific fundamentals. Investors are now closely watching Washington negotiations and upcoming macro signals for clarity on near-term market direction.
