Bitcoin extended its recent decline on Sunday, dropping near the $87,000 mark as risk-off sentiment gripped global markets. The world’s largest cryptocurrency fell 1.93% over 24 hours to $87,158, while Ethereum lost 3.17%, trading around $2,847. Analysts point to growing fears of a partial U.S. government shutdown as the main catalyst pressuring risk assets, including cryptocurrencies.
The political standoff in Washington has intensified after Senate Democrats threatened to block funding for the Department of Homeland Security following controversy over federal law enforcement actions. The heightened uncertainty comes only months after the longest U.S. government shutdown in history, increasing risk premiums across broader markets. Polymarket data suggests the probability of a shutdown has climbed to 75%, signaling heightened macro risk for investors.
Institutional demand for crypto also reflects this cautious mood. U.S. spot Bitcoin exchange-traded funds saw their largest weekly outflows since February 2025, with roughly $1.33 billion exiting the market as of January 23. Despite this, selective institutional buying continues in key crypto-linked equities. Ark Invest, for example, disclosed significant purchases of Coinbase, Bullish, and Circle shares, demonstrating long-term conviction among certain market participants. Analysts note, however, that Ark’s activity may not represent broader institutional sentiment, which appears softer overall at the margin.
Experts emphasize that macroeconomic developments, including the Federal Reserve’s upcoming interest rate decision and U.S. producer price index data, will be critical in shaping near-term crypto performance. ETF flow stabilization and Bitcoin’s ability to hold recent support levels are seen as key signals for the market. While short-term volatility is expected, seasoned investors view these fluctuations as part of crypto’s broader risk-reward landscape.
Looking ahead, Bitcoin and broader crypto markets are likely to remain sensitive to U.S. political developments and macroeconomic indicators. Market participants are watching closely for signs of stabilization, with cautious optimism that selective institutional interest and infrastructure investment may support a medium-term recovery. The evolving policy environment will continue to influence sentiment, reinforcing the importance of macro-aware strategies in crypto investment.
