The crypto market cap fell 2% on Tuesday as fears of an impending U.S. government shutdown continued to rattle investors.
Summary
- The crypto market remained shaky on Tuesday amid fears of a partial U.S. government shutdown slated to begin later this week.
- Expectations of further delays in a key crypto market structure bill and a lack of stable demand for ETFs have also impacted retail sentiment.
Bitcoin (BTC), the world’s largest crypto asset, saw-sawed between the $68,400 to $71,000 range before settling at $69,400 at press time, down 2.4% over the day.
Ethereum (ETH) was down 1.2%, hovering just over the $2,000 mark while extending its weekly losses to 12%. XRP (XRP) remained neutral at $1.44 while BNB (BNB), Solana (SOL), and Dogecoin (DOGE) were down by 1% each. These losses together led the market to fall by 2% to $2.44 trillion at the time of writing.
As prices dropped, they triggered liquidations from leveraged crypto markets. Data from CoinGlass shows that nearly $300 million was liquidated from the crypto market over the past day, with the greater proportion of it coming from long liquidations.
Crypto prices remained shaky on Tuesday as investors remain on edge over a potential partial U.S. government shutdown slated to commence on Friday, Feb. 13, over disputes surrounding federal budget allocations.
Investors are likely recalling how the previous 43-day shutdown from Oct. 1 to Nov. 12, 2025, created a data vacuum for the Federal Reserve and thus prevented the central banking body from accurately evaluating interest rates.
As per data from the predictions market Polymarket, the odds of the government shutdown rose sharply from 59% to 76% earlier today before settling at 69% when writing.
Aside from complicating future Fed rate cuts, the shutdown could also lead to a delay in the progress of a highly awaited crypto market structure bill, the Clarity Act, which has faced delay previously with the closely divided Senate, which postponed the markup proceedings to a currently unspecified date.
The delay in this crucial bill has been eroding the risk appetite of investors who are growing increasingly frustrated with the lack of regulatory certainty.
At the same time, crypto investors are concerned over the recent nomination of Kevin Warsh, who is considered by many to be hawkish for monetary policies.
Bearish market sentiment
The crypto market has also tanked as investors remain in a state of panic, as tech-heavy U.S. stocks showed weakness recently, while precious metals such as gold and silver, and U.S. bonds continued to gain strength as safe-haven assets.
Cryptocurrencies have historically often been the first to be impacted by weakness in U.S. equities, as they share a high correlation with the broader technology sector.
Meanwhile, the lack of consistent institutional demand has also played a key role in keeping retail appetite in check. Per data from SoSoValue, U.S. spot Bitcoin ETFs recorded only $145 million in net inflows on Monday, marking a 60% drop from the inflows recorded last Friday.
The decline in flows also comes as the netflow for the month remains negative with outflows of $173 million. It also follows three back-to-back months of outflows where over $6 billion exited the funds.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
