Crypto Sell-Off Intensifies: ETH Hits $4K While BTC and XRP Slide on Government Shutdown Fears

Ether (ETH $3,958) led declines across major cryptocurrencies Thursday during Asian trading, as the likelihood of a U.S. government shutdown surged to record levels.

On the decentralized prediction platform Polymarket, “Yes” shares for the contract “U.S. government shutdown in 2025?” climbed to 77%, marking the highest probability since the contract’s January launch. Traders are effectively pricing a 77% chance of a shutdown by Dec. 31, with the odds of a shutdown by Oct. 1 at 63%.

Media reports indicate the White House is preparing for large-scale furloughs and staff cuts should Congress fail to pass a funding measure. On Wednesday, the Office of Management and Budget issued a memo directing agencies to draft contingency plans if spending legislation is not approved next week.

The government is projected to run out of funds by the end of September. Congress must either approve a short-term continuing resolution or pass the 12 full-year funding bills to avoid a shutdown. Securing the 60 votes required typically necessitates bipartisan support.

Cryptocurrencies Feel the Pressure

• ETH fell more than 3%, testing the $4,000 level for the first time since August 8
• Bitcoin (BTC $109,362) declined over 1%, slipping below $112,000
• Other major tokens—including XRP ($2.7469), SOL ($196.78), and DOGE ($0.2277)—dropped 2.6%–3%, with Solana nearing a break below $200

The CoinDesk 20 Index retreated 2% to 3,940 points, while S&P 500 and Nasdaq futures traded flat to slightly positive.

Investor caution appears linked to the potential shutdown, compounded by comments from San Francisco Fed President Mary Daly, who expressed support for further rate cuts but emphasized a data-driven approach.

The Fed cut rates by 25 basis points on Sept. 17, hinting at two more cuts by year-end, though officials, including Chairman Jerome Powell, have signaled a cautious pace. Seven Fed officials, including New York Fed’s John Williams, are scheduled to speak Thursday, ahead of Friday’s PCE inflation data, the Fed’s preferred gauge of price trends.

Market Outlook

“If inflation pressures appear contained, markets may see room for further Fed cuts, providing liquidity tailwinds into Q4. That could serve as a catalyst for BTC to attempt a long-anticipated breakout,” noted the QCP Capital market insights team.

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