Bitcoin (BTC) dropped to around $72,800 yesterday as U.S. lawmakers debated a stopgap funding package before swiftly recovering once the House passed the bill, alleviating fears of a government shutdown.
The rapid recovery underscores how closely the crypto market is tied to U.S. political developments, even in the absence of blockchain-specific news.

Shutdown Fears Impact Crypto

As noted by on-chain analytics firm Santiment, the sell-off occurred during U.S. trading hours while headlines highlighted a contentious vote in the House. The buildup of uncertainty led BTC to fall rapidly and triggered around $30 million in DeFi liquidations, mirroring a drop in the S&P 500 and gold, typically seen as a safe haven.
This correlation suggests that traders were broadly reducing their exposure to volatile assets due to the political uncertainty, rather than any crypto-specific issues.
There were concerns about the passage of a substantial $1.2 trillion funding package to keep most federal agencies operating through September 30. Failure to approve the package would have initiated a partial shutdown, further delaying key economic data and stressing an already cautious market.
Despite divisions among Republican representatives, the bill ultimately passed, preventing a shutdown and causing immediate market relief. Bitcoin rebounded past its lows, gaining over 5% within hours, and the S&P 500 followed suit. Santiment pointed out that this quick recovery was primarily driven by fears regarding political dysfunction, rather than a fundamental reassessment of Bitcoin’s value.

Ongoing Pressures on Bitcoin

While the news surrounding the funding bill acted as a short-term catalyst, Bitcoin continues to face broader challenges. According to CoinGecko, the digital asset has seen a nearly 14% decline in the past week and a 17% decrease for the month.
Galaxy Digital recently published an analysis warning about deteriorating on-chain metrics, noting that 46% of Bitcoin’s circulating supply is now ‘underwater’, meaning it last transacted at higher prices, which could heighten selling pressure. Furthermore, a lack of significant accumulation among large holders raises additional concerns.
Additionally, reports on February 3revealing that Iran aims to change the format of nuclear negotiations with the U.S. contributed to another downward trend in Bitcoin’s value, pushing it below the $75,000 mark and resulting in losses of at least $20 million in derivative positions.
Analysts like Doctor Profit have revised their predictions, suggesting that the cycle’s bottom may find support between $44,000 and $54,000. The critical question remains whether resolving immediate U.S. political risk will suffice to address these adverse technical and on-chain trends, or if BTC remains at risk of deeper corrections.