Roughly $100 billion was erased from the cryptocurrency market late Sunday as renewed concerns over a potential partial shutdown of the US government prompted risk-off positioning among traders. The sell-off followed threats from Senate Democrats to block a funding package if it included allocations for the Department of Homeland Security, which oversees Immigration and Customs Enforcement, after a federal shooting incident in Minneapolis on Saturday.

“Democrats sought common sense reforms in the Department of Homeland Security spending bill, but because of Republicans’ refusal to stand up to President Trump, the DHS bill is woefully inadequate to rein in the abuses of ICE. I will vote no,” said Senate Democrat Leader Chuck Schumer. He added that “Senate Democrats will not provide the votes to proceed to the appropriations bill if the DHS funding bill is included.”

Market data from TradingView shows the total crypto market capitalization fell from $2.97 trillion to $2.87 trillion within about six and a half hours by 9:30 pm UTC on Sunday. Bitcoin declined 3.4% over the past 24 hours, while losses were steeper across altcoins, with Ether down 5.3% over the same period.

Liquidations mount as shutdown odds surge

The downturn was accompanied by a wave of liquidations, with more than $360 million in leveraged crypto positions wiped out in the past day. Of that total, approximately $324 million came from long positions, according to data from Gate.

At the same time, prediction markets signaled rising expectations of a government shutdown. Odds on Kalshi for a shutdown by Saturday, Jan. 31, jumped from below 10% on Saturday to 78.6% on Sunday, while Polymarket showed similar odds near 80%.

Additional pressure on sentiment came from escalating geopolitical risks. Traders also reacted to President Donald Trump’s threat to impose tariffs of up to 100% on Canada if it were to strike a deal with China, as well as reports of US warships being deployed to the Middle East amid rising tensions with Iran.

Memories of past shutdowns weigh on sentiment

Crypto investors remain mindful of how markets behaved during the last US government shutdown. During the record 43-day shutdown from Oct. 1 to Nov. 12, Bitcoin fell from its all-time high of $126,080 to below $100,000. That decline coincided with prolonged political gridlock in Washington and the broader crypto market crash on Oct. 10, which was partly linked to Trump’s tariff threats toward China.

Since Oct. 10, gold has significantly outperformed Bitcoin, indicating that many investors continue to rotate toward traditional safe-haven assets during periods of heightened geopolitical and macroeconomic stress. Reflecting this defensive stance, the Crypto Fear & Greed Index dropped another five points on Monday to 20 out of 100, marking a sixth consecutive day in the “extreme fear” zone.

Sources:

https://www.democrats.senate.gov/newsroom/press-releases/leader-schumer-statement-announcing-senate-democrats-will-not-advance-appropriations-bill-if-dhs-funding-is-included

https://polymarket.com/event/will-there-be-another-us-government-shutdown-by-january-31

https://cointelegraph.com/news/crypto-wipes-100-billion-us-government-shutdown-fears

https://kalshi.com/markets/kxgovshut/government-shutdown/kxgovshut-26jan31

https://www.tradingview.com/symbols/TOTAL/?timeframe=7D

https://www.gate.com/crypto-market-data/funds/liquidation

https://www.coingecko.com/en/coins/bitcoin