Bitcoin Update: Government Shutdown Drains $700 Billion, Hastening Bitcoin's Downward Trend

Analysts report that the ongoing U.S. government shutdown, which has now matched the record for the longest in history at 35 days, has intensified a liquidity crunch, pulling $700 billion out of financial markets via the Treasury General Account (TGA).

, the top cryptocurrency by market value, has dropped close to 19% from its October record, trading near $102,600 as of November 4. The TGA’s balance has climbed to $1 trillion, draining funds from private markets and curbing both lending and investment, according to BitMEX analysts cited by . This situation has driven overnight repo (SRF) usage to unprecedented highs, further limiting liquidity for riskier assets.

Since starting on October 1, the shutdown has brought federal operations to a halt and interrupted services such as food assistance. Lawmakers from both sides are looking to Tuesday’s elections as a possible turning point to resolve the deadlock, according to

. Senate Majority Leader John Thune (R-SD) and House Speaker Mike Johnson (R-LA) have expressed hope that negotiations after the election could result in a deal to reopen the government by week’s end. However, the Senate’s 14th effort to pass a stopgap funding bill failed on November 4, with only three senators aligned with Democrats supporting the Republican proposal, as reported by .

At the same time, Interior Secretary Doug Burgum has faced backlash for embarking on a high-profile trip to the Middle East and Europe to promote U.S. oil and gas exports, while national parks suffer from closures and staff furloughs. Democrats have accused him of neglecting his duties during the shutdown, according to

. Burgum argued that the trip was essential for advancing energy policy, though critics have questioned the appropriateness of using taxpayer funds for travel during a government closure.

The cryptocurrency sector, already under pressure from broader economic challenges, is facing new obstacles. BitMEX analysts believe the shutdown has sped up a correction in Bitcoin’s four-year bull run, which was previously expected to peak in 2024 with the launch of U.S. spot Bitcoin ETFs and the halving event. They note that the current volatility mirrors past cycles, where Bitcoin typically reaches a high near the cycle’s end before dropping 70-80% the following year.

Despite the market slump, crypto businesses are still growing. Jackbit, a crypto casino that doesn’t require KYC, has announced plans to expand globally in 2025, using AI-powered personalization and instant payouts through smart contracts to boost user engagement, according to

. Meanwhile, MoonPay has partnered with Pump.fun to allow instant crypto purchases via Apple Pay and Google Pay, making it easier for Solana traders to get started, as reported by .

The Federal Reserve’s Standard Repo Facility (SRF) has emerged as a key measure of the liquidity squeeze, with increased usage signaling cash shortages among banks. BitMEX analysts remain optimistic about a sharp market rebound once the shutdown ends, expecting a surge of liquidity to return and coincide with Bitcoin’s seasonal uptrend.