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The odds of a US government shutdown have plunged by roughly a third as President Donald Trump and Senate Majority Leader Chuck Schumer move closer to a funding agreement, offering relief to cryptocurrency markets that had sold off amid political uncertainty.
Prediction market data shows shutdown probabilities falling sharply from recent highs above 75%, easing macroeconomic pressure on Bitcoin and Ethereum. However, ongoing disputes over Department of Homeland Security funding and immigration enforcement continue to threaten regulatory clarity for the digital asset industry.
Prediction markets, where traders bet on political outcomes, had recently priced in elevated chances of a U.S. government shutdown around January 31, reflecting deepening partisan standoffs in Congress. However, fresh negotiations between the White House and Senate leaders have swung sentiment.
Pierre-market data tracked by crypto outlets showed shutdown odds crashing by about a third after signs of consensus emerged on splitting DHS funding from the broader appropriations package in the Senate.
A tentative plan would advance separate spending measures to keep core government functions operational while lawmakers continue debating contentious immigration policy reforms.
Reuters reports that by decoupling DHS funding, which has become a flashpoint following criticism of federal immigration enforcement, negotiators hope to avert a shutdown by the statutory deadline.
Still, the funding bill must clear both chambers of Congress. Earlier threats by Senate Democrats to block DHS expenditures without added oversight provisions show how closely fiscal policy is intertwined with broader political battles.
“The American people support law enforcement … they do not support ICE terrorising our streets.”
Senate Democrats said in pushing for conditions on immigration agents’ conduct.
The looming fiscal impasse had already been felt across digital asset trading floors.
Bitcoin and other major cryptocurrencies experienced price declines as prediction markets lifted shutdown odds toward 75–80 per cent, a level that analysts said reflected broader market anxiety over potential delays to regulatory clarity and economic data releases.
A recent market brief noted that Bitcoin’s price slid amid rising political risk, while gold and silver advanced as investors sought traditional safe havens.
Macro uncertainty tied to Washington’s budget standoff has been a key factor behind crypto volatility. Industry commentators attributed these moves to political risk rather than crypto-specific fundamentals.
“Macro risk and political gridlock, not crypto-specific issues, are driving near-term Bitcoin and altcoin sentiment.” An analyst from research firm Presto Research told market observers.
In a separate analysis, crypto markets have historically seen delayed economic data and reduced liquidity during government funding lapses, outcomes that can undermine investor confidence and stall momentum in digital asset sectors.
A government shutdown would have ramifications beyond the blockchain space. Key federal agencies, from DHS to courts and administrative offices, could face operational disruptions if funding lapses, affecting everything from tax processing to national security functions.
According to Reuters, the potential shutdown hinges on a complex combination of budget politics and reform demands, with essential services subject to interruption if lawmakers fail to act.
Prolonged political uncertainty could delay crucial regulatory reviews and approvals by agencies like the Securities and Exchange Commission (SEC), which already paused many routine processes during past funding gaps.
Still, the recent reduction in shutdown odds offers a measure of relief for markets sensitive to political risk. Should a funding deal be finalised ahead of the imminent deadline, crypto investors may see a stabilisation in price action and a clearer path for regulatory developments in the coming weeks.
