- Bitcoin dips to $86K and Ethereum slips to $2,785 as macro risks trigger heavy liquidations.
- U.S. political uncertainty and potential government shutdown keep crypto investors cautious.
- Traders unwind yen exposure while safe-haven assets like gold and silver continue rising.
Crypto markets came under heavy pressure early Monday, with over $550 million in leveraged trades liquidated as investors pulled back. Bitcoin dipped briefly to $86,000, and Ethereum fell to $2,785. After a quiet weekend, early trading in Asia triggered a sudden wave of selling.
As per QCP, the selling pressure came as investors grew nervous about the economy and U.S. politics, making them avoid risky assets. As a result, safe-haven assets like gold and silver continued to rise as people looked for stability.
On top of global tensions, other factors added to the sell-off. President Trump’s talk of possible 100% tariffs on Canadian imports worried traders, while concerns about a partial U.S. government shutdown added more uncertainty.
Moreover, worries about a possible U.S.-Japan move to stabilize the yen made investors more cautious. Last Friday, the New York Fed’s “rate check” showed just how sensitive markets are to the yen dropping too much, even though USD/JPY is near two-month highs around 154. Traders are carefully closing bets against the yen to avoid getting caught off guard by sudden central bank action.
Political and Fiscal Risks Weigh on Markets
Uncertainty in U.S. politics is making investors nervous. House Republicans plan to pass bills that include $64.4 billion for border security, but Senate Democrats might block them. With government funding set to run out on January 30, a partial shutdown is a real possibility.
Polymarket shows about a 75% chance of a U.S. government shutdown by January 31, which is making investors nervous. As a result, crypto traders are acting cautiously, buying protective options like BTC 30JAN26 88k puts and rolling them down to 85k strikes.
Additionally, the week has a lot of tech earnings to digest, as well as a Federal Reserve meeting on Wednesday. While a rate hike is not expected at this meeting, investors will pay close attention to what Jerome Powell says to get a feel for what’s to come. Overall, traders are being cautious as market swings are wide and political/economic conditions are still up in the air.