- Bitcoin trembles at $87,000, down 5% over the past week.
- Deadly Minneapolis shooting sparks federal shutdown fears.
- Polymarket bettors see 78% chance of a federal shutdown.
The deadly shooting in Minneapolis on Saturday risks triggering a government shutdown that will push down Bitcoin’s price further, analysts say.
Senate Democrats vowed to block a funding bill for the Department of Homeland Security.
Bettors on prediction market Polymarket now anticipate a 78% chance for a shutdown after another fatal immigration raid sparked nationwide protests.
That’s bad news for cryptocurrency prices.
“As seen during the October shutdown, this dynamic is negative for liquidity,” analysts David Brickell and Chris Mills of the London Crypto Club said in their weekly newsletter.
October and November’s record 43-day government shutdown devastated markets as key US agencies responsible for data and oversight were left “flying blind,” the White House said.
The rising tensions on Capitol Hill adds another element of uncertainty to markets already beleaguered by US President Donald Trump’s aggressive foreign policies and his campaign to bring the Federal Reserve to heel.
The value of the dollar dipped another 0.5% over the weekend as traders dumped exposure to US assets, Bloomberg data reveals.
Safe havens
Investors have responded to the market uncertainty by rushing to safe haven assets.
Gold surged past $5,000 per ounce and silver set a new historical price record at over $100 per ounce over the weekend.
Bitcoin has not enjoyed the same surge despite maxis’ oft-quoted view that the top cryptocurrency will function as a safe haven asset. Instead, it fell 3% down to just over $86,100 over the past 24 hours. It has recovered slightly since, but is still down over 5% over the past week.
Exchange-traded funds backed by Bitcoin have seen $117 million in net outflow in January, the third consecutive down month, DefiLlama data shows.
And there are still more Bitcoin sellers than buyers at these levels, which has a negative impact on price, Brickell and Mills said.
“Demand remains insufficient to absorb selling from short-term holders who bought near the highs and are now distributing into rallies,” they wrote.
To be sure, the pair do see some upside.
“The macro backdrop remains broadly supportive: disinflation is progressing, growth remains resilient, and global liquidity dynamics are turning more favourable,” they said.
Investors dumping exposure to US assets isn’t the only thing driving up the price of gold and other metals, according to Ed Yardeni, president of Yardeni Research.
“This is all happening because rising geopolitical tensions are driving a military arms race, and defence companies need metals to increase their output,” he wrote.
Metals companies’ share prices are soaring as well, he said.
“Also boosting metals prices is the geopolitical AI arms race, which is escalating capital spending on technology,” he said.
Crypto market movers
- Bitcoin is down 0.4% over the past 24 hours, trading at $87,889.
- Ethereum is down 0.7% past 24 hours at 2,906.
What we’re reading
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email at lance@dlnews.com.
