We are just recovering from the historic 43-day government shutdown, and before U.S. agencies can catch their breath, a new shutdown crisis is already looming.

Based on the current situation, if a budget agreement is not reached by midnight on January 30, the vast majority of federal agencies will have to shut down again. The core issue is that Congress went on holiday directly before Christmas, leaving the budget negotiations in disarray. At present, most departments can only rely on a "continuing resolution" (CR) as a lifeline to last until January 30, with funding levels roughly the same as last year. Only a few departments, such as Agriculture, Veterans Affairs, and Military Construction, have secured full-year budgets in advance, allowing them to operate until September.

During the holiday period, there was no substantive progress between the parties. After reconvening on January 6, they have only about three weeks left to resolve this deadlock.

**Intensified Political Game**

The key is that Trump’s previous administration was very adept at wielding the shutdown as a bargaining tool. Now, with Republicans controlling Congress, Democrats are starting to play their hand. Reports indicate that Democrats are strategizing—using the January 30 deadline to pressure Trump to extend the Obamacare subsidies that are set to expire on December 31, or threaten another shutdown. Trump’s side is not backing down either, openly accusing Democrats of trying to disrupt healthcare issues through this.

This back-and-forth political tug-of-war is directly harming market certainty.

**Market Reactions to the Shutdown**

Prediction markets like Polymarket have already reflected this anxiety—the probability of a shutdown has surged to nearly 38% during the holiday period. Uncertainty itself is the enemy of markets. Historical data shows that during the last shutdown, Bitcoin experienced significant volatility—partly due to liquidity contraction fueling risk asset sell-offs, and partly because liquidity returned after the shutdown ended, triggering rebounds. This is the market’s "inverse QE effect."

If a shutdown occurs, what will happen to crypto assets?

**Short-term Impact**: Increased volatility is inevitable. Bitcoin and U.S. stocks will face larger swings, and investor sentiment will sway market direction. Liquidity may first contract then rebound, depending on how long the shutdown lasts.

**Medium-term Impact**: Regulatory bills for crypto markets (such as the highly discussed Crypto Market Structure Act) will continue to be frozen, and the approval process for new spot ETFs or options products will slow down. Overall market risk appetite will decline.

**Lessons from Historical Patterns**: U.S. politicians tend to perform last-minute brakes on the edge of the cliff. In countless "boy who cried wolf" scenarios, most of the time a temporary agreement is reached just before the deadline, only to kick the can down the road again. This time is likely to follow the same pattern.

Many market participants have bet that this shutdown will ultimately be "extended" successfully. But some are betting it will only last a few days this time.

**Implications for the Crypto Space**

Ultimately, government shutdowns can be both bearish and covertly opportunistic for crypto markets—depending on your perspective. Short-term risk aversion will intensify, but in the long run, such policy uncertainties often lead to liquidity rebounds once resolved. If history is any guide, the ongoing political theater in Washington, which started in 2026, will continue to provide material for crypto market volatility.