Crypto Rebounds from Free Fall as Government Shutdown Crisis Ends

217 to 214. That's how close the U.S. House came to leaving the government in shutdown limbo. But those three votes made all the difference—not just for federal workers, but for crypto traders watching their portfolios bleed red throughout Tuesday's session.

Bitcoin had plummeted to $72,800, its lowest point since before Trump's election victory in November 2024. The funding package passage immediately stemmed the bleeding, though BTC remains down 4.5% over 24 hours at $74,800.

When Politics Meets Portfolios

Ethereum took an even harder hit, dropping 7% in a day to $2,181 and a staggering 26% over the past week. Major altcoins like XRP and Solana followed suit with similar double-digit declines.

The correlation was unmistakable: as political uncertainty spiked, crypto confidence cratered. This wasn't just about government operations—it was about regulatory clarity in an industry that thrives on predictability, even amid its inherent volatility.

Traditional markets felt the tremors too. The Nasdaq dropped 2% and the S&P 500 fell 1.3%, though both recovered somewhat after the funding news broke. The synchronized selloff reinforced crypto's evolution from fringe asset to mainstream risk-on investment.

Temporary Relief, Persistent Questions

While the immediate crisis has passed, the resolution is incomplete. Department of Homeland Security funding remains under negotiation for the next week and a half. President Trump's signature will officially reopen the government, but the underlying political dynamics that created this standoff haven't disappeared.

For crypto investors, this episode highlights a uncomfortable reality: despite promises of being a hedge against traditional finance, digital assets increasingly move in lockstep with conventional markets during stress periods. The "digital gold" narrative takes another hit when Bitcoin acts more like a tech stock than a safe haven.

Market Maturation or Growing Pains?

The swift recovery following political resolution suggests crypto markets are becoming more responsive to macroeconomic factors—a sign of maturation, or perhaps growing dependence on traditional financial infrastructure.

Institutional adoption has brought stability in some ways, but it's also imported the correlations and vulnerabilities of legacy finance. When pension funds and corporate treasuries hold crypto, political risk in Washington becomes portfolio risk everywhere.