Bitcoin slides near $87,000 as US government shutdown fears weigh on crypto

Bitcoin BTC extended its recent slide late Sunday, falling near the $87,000 mark as broader risk-off sentiment rippled through crypto markets. 

The world's largest cryptocurrency fell 1.93% in the past 24 hours to $87,158, while Ethereum slipped 3.17% to $2,847, according to The Block's price page.

"The move in crypto to start the week was driven by a broad macro risk-off impulse rather than crypto-specific news," Rick Maeda, research associate of Presto Research, told The Block. 

Maeda pointed to rising U.S. government shutdown risk, fueled by funding uncertainty and political deadlock, as the key catalyst pressuring risk assets across the board. "Crypto was not immune," he said.

Concerns over a potential partial government shutdown have intensified in recent days amid legislative friction in Congress, where Democratic lawmakers have threatened to block a Department of Homeland Security funding bill following controversy over federal law enforcement actions, the Associated Press reported. The standoff — coming just months after the longest government shutdown in U.S. history — has raised political risk premiums across broader markets.

"Markets remain wary as the probability of a potential U.S. government shutdown has climbed to 75% on Polymarket, driven by stalled spending-limit negotiations," said Vincent Liu, CIO of Kronos Research.

Institutional demand

Broader sentiment in crypto reflects this cautious tone. U.S. spot bitcoin exchange-traded funds posted their worst week since February 2025, recording roughly $1.33 billion in net outflows in the week ended Jan. 23, according to SoSoValue data.

"Institutional demand looks cautious but targeted," said Liu. "While broad outflows from spot Bitcoin ETFs signal risk-off sentiment, selective buying in infrastructure and industry leaders, like ARK's Coinbase purchases, suggests long-term conviction remains."

Ark Invest disclosed millions of dollars' worth of purchases of Coinbase, Bullish, and Circle shares on Friday. However, Maeda of Presto said that ARK's activity may not reflect wider institutional sentiment, noting that the firm has consistently favored crypto-related equities across market cycles, including during drawdowns.

"Overall, ETF flow data points to softer institutional demand at the margin, despite selective buying in crypto-linked equities," Maeda said.

Looking ahead, analysts said macro developments remain the primary driver. Traders will closely watch this week's Federal Reserve interest rate decision, alongside U.S. producer price index data, for clues on the policy outlook and inflation. 

"In crypto specifically, ETF flow stabilization and BTC's ability to hold recent support levels are key near-term signals," Maeda added.