Bitcoin fell below $88,000 on Sunday evening as concerns about a potential US government shutdown weighed heavily on cryptocurrency markets. The world’s largest cryptocurrency dropped 1.93% in 24 hours, landing at $87,158, while Ethereum also saw a decline, dropping 3.17% to $2,847 during the same timeframe.
According to market intelligence data, the probability of a US government shutdown has surged to 75% on Polymarket. This alarming trend arises from stalled spending limit negotiations and escalating partisanship in Congress, with a standoff primarily surrounding funding for the Department of Homeland Security. The growing uncertainty reflects a broader risk-off sentiment permeating through various asset classes including cryptocurrencies.
The move in crypto to start the week was driven by a broad macro risk-off impulse rather than crypto-specific news,” said Rick Maeda, research associate at Presto Research.
Moreover, the cryptocurrency market faced immense liquidations, with over $250 million worth of liquidations occurring within a mere 24 hours, as reported by data from CoinGlass. The majority of these liquidations were long positions, further adding to the bearish sentiment among traders.
Trader CrypNuevo highlighted $86,300 as a critical support level for Bitcoin bulls, suggesting that if the cryptocurrency loses that mid-range, a drop back to the low $80s could be on the horizon in the coming weeks.
ETF Outflows Signal Caution
In a worrying sign for market health, US spot Bitcoin exchange-traded funds (ETFs) encountered their worst week since February 2025, recording approximately $1.33 billion in net outflows for the week ending January 23, as per SoSoValue data. This sharp outflow reflects the cautious stance many investors have adopted amid prevailing market uncertainties.
While broad outflows from spot Bitcoin ETFs signal risk-off sentiment, selective buying in infrastructure and industry leaders suggests long-term conviction remains,” said Vincent Liu, CIO of Kronos Research.
Interestingly, while many ETFs faced outflows, Ark Invest capitalized on the market dip, purchasing millions of dollars in shares for Coinbase, Bullish, and Circle. This move highlights Ark’s enduring confidence in the crypto sector, a sentiment that has characterized its investment strategy across various market cycles.
Fed Decision Looms
As traders brace for further volatility, the Federal Reserve is expected to announce its interest rate decision on January 28, with the odds of a 0.25% rate cut sitting at just 2.8% according to the CME Group’s FedWatch Tool. Despite pressure from President Donald Trump to reduce rates, markets largely anticipate no changes.
Analysts suggest that upcoming data on the US producer price index will provide vital insights into inflation trends, further influencing market strategies. “In crypto specifically, ETF flow stabilization and BTC’s ability to hold recent support levels are key near-term signals,” remarked Maeda.
With the impending economic landscape fraught with uncertainty, traders and investors alike will be closely monitoring developments as they navigate these choppy waters.
