Crypto Market Stalls as U.S. Government Shutdown Looms, Bitcoin Holds Near $114K

The cryptocurrency market lost momentum on Tuesday as the U.S. government moved closer to a midnight shutdown deadline. Bitcoin (BTC) hovered around $114,300 after slipping from overnight highs near $115,000, while Ether (ETH) traded just above $4,100, down 1.3% in the past 24 hours. Most altcoins also faced losses, with Avalanche (AVAX), Uniswap (UNI), and NEAR leading declines in the CoinDesk 20 Index.

In traditional markets, gold extended its record-breaking rally, gaining 0.5% to $3,850, while U.S. equities, including the Nasdaq and S&P 500, posted late-session gains. Still, uncertainty surrounding the government shutdown kept many traders on the sidelines.

A shutdown would halt non-essential government operations, affecting regulators like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). This pause could delay ongoing rulemaking for crypto, reviews of crypto-related exchange-traded funds (ETFs), and other regulatory approvals. Congressional work on crypto legislation also faces setbacks, with the Senate Banking Committee pushing back its scheduled markup of a draft market structure bill. However, the Senate Finance Committee still plans to hold a hearing on crypto tax issues.

Analysts at Bitfinex warned that the shutdown may amplify volatility by delaying key U.S. economic data such as jobs reports and inflation numbers. These blind spots could complicate the Federal Reserve’s monetary policy decisions, while further eroding investor confidence. Global investors have already been trimming U.S. exposure, a trend that could accelerate if the shutdown drags on.

Despite the near-term uncertainty, Bitcoin remains in a corrective phase following September’s Fed rate cut, which triggered a “buy the rumor, sell the news” response. Analysts noted that the current cycle has seen three distinct profit-taking peaks, signaling widespread distribution at market tops. With political polarization, fiscal deficits, and global economic fragility weighing on sentiment, markets may face prolonged consolidation before the next major move.