TLDR
- Bitcoin drops below $112,000 and Ethereum falls 3% to $4,000 as crypto markets decline Thursday
- Government shutdown odds hit 77% on Polymarket as Congress faces September 30 funding deadline
- White House prepares job cut plans while $1.65 billion in crypto leveraged positions liquidated
- Federal Reserve officials maintain cautious approach to rate cuts despite dovish signals
- Dollar strength and risk-off sentiment add pressure to digital asset prices
Cryptocurrency prices fell across the board Thursday as Bitcoin and Ethereum led major digital assets lower while concerns about a potential U.S. government shutdown intensified.
Bitcoin price dropped over 1% to trade below $112,000 during Asian hours, while Ethereum fell more than 3% to test the $4,000 level for the first time since August 8. The broader crypto market decline came as government shutdown fears reached new highs.
Traders on decentralized prediction market Polymarket are now pricing a 77% probability of a U.S. government shutdown occurring by December 31, 2025. The odds of a shutdown happening by October 1 stand at 63%, marking record high levels since the betting contract launched in January.
Congress Faces September Funding Deadline
The White House is preparing for potential large-scale job cuts as the federal government approaches a funding crisis. On Wednesday, the Office of Management and Budget issued a memo directing agencies to prepare plans for staff reductions and furloughs if Congress fails to pass a spending bill next week.
The government is expected to run out of money by September 30. To prevent a shutdown, Congress must either approve a short-term continuing resolution or pass 12 full-year funding bills. Since lawmakers cannot complete the full-year legislation before the deadline, a temporary funding measure is required.
To reach the 60-vote threshold needed in the Senate, bipartisan support is typically necessary. This requirement has complicated negotiations as political tensions remain high in Washington.
Other major cryptocurrencies also declined Thursday. XRP fell 2.6%, Solana dropped 3% and appeared poised to break below $200, while Dogecoin declined 3%. The CoinDesk 20 Index fell 2% to 3,940 points.
Crypto Liquidations Add Selling Pressure
Beyond government shutdown worries, cryptocurrency markets faced additional headwinds from leveraged position liquidations. Over $1.65 billion in leveraged long crypto positions have been liquidated recently, accelerating the selling pressure across digital assets.
The strengthening U.S. dollar has made speculative investments like cryptocurrencies less attractive to investors. This trend has prompted capital flows toward safer assets during periods of economic uncertainty.
Federal Reserve policy continues influencing market sentiment. San Francisco Fed President Mary Daly reiterated support for additional rate cuts but declined to provide a specific timeline, emphasizing the central bank’s data-dependent approach.
The Fed cut interest rates by 25 basis points on September 17 while signaling two more potential rate cuts before year-end. However, policymakers including Chairman Jerome Powell have since adopted a more cautious stance on future monetary policy decisions.
Seven Fed officials are scheduled to speak Thursday, while traders await Friday’s Personal Consumption Expenditures data release. The PCE index serves as the Federal Reserve’s preferred inflation measure and could influence future rate decisions.
Singapore-based QCP Capital noted that contained inflation pressures could provide room for additional Fed rate cuts, potentially creating liquidity tailwinds into Q4 2025.
