Last October, the U.S. government shutdown lasted 43 days, leading to a tightening of global financial liquidity and a sharp decline in the cryptocurrency market.
Many people still remember that event vividly. And by the end of this month, a similar event might happen again.
Three days ago, Trump said during an interview in Davos, "I think we're in trouble again, and we might once again face a government shutdown caused by the Democrats." Although lawmakers are working to finalize a funding agreement, with only four working days left before the January 30 deadline, another government shutdown appears increasingly difficult to avoid.
Currently, the probability on Polymarket for the question "Will the U.S. government shut down again before January 31?" has surged to 80%.
Currently, the main disagreement between the two parties centers on funding for ICE (Immigration and Customs Enforcement) and funding for the Affordable Care Act (Obamacare). These are also long-standing contentious issues in the political competition between the parties: immigration policy and social welfare. To further understand why a government shutdown might occur, we need to start with the largest welfare fraud case in U.S. history, which took place in Minnesota.
It all started in Minnesota.
U.S. federal agents are investigating a fraud case in Minnesota.
The story begins with the outbreak of the pandemic in 2020. In the United States, there is a traditional welfare policy that provides free lunches to children from low-income families. Before the pandemic, this program was strictly regulated—meals had to be consumed in schools or official community centers, with children eating together and roll calls taken to prevent fraud. However, with the pandemic, schools closed and children stayed home. In response, the U.S. Congress quickly changed the policy, allowing meals to be taken home in pre-packed form without strict oversight. As long as an organization was registered as a non-profit and claimed to have distributed a certain number of meals, the government would pay accordingly, with no upper limit.
This vulnerability was the context in which the Minnesota welfare fraud case occurred, exposed by an American自媒体 blogger, Nick Shirley.
In December 2025, Nick Shirley posted a 42-minute investigative video that went viral overnight. In the video, he exposed a number of nonprofit organizations that claimed to provide "child nutrition" and "support for vulnerable populations." These groups applied for funding from state and federal governments, claiming on paper to serve thousands of children. In reality, however, many of these children did not exist, and the meals for children also did not exist. The so-called charitable programs were merely shells used to siphon off public funds.
After the video was released, it quickly spread, with views exceeding tens of millions within the first 24 hours. Combined with various short video clips and forwards, the total reach exceeded 100 million times. Following the incident, after investigations by the Department of Homeland Security (DHS) and the Federal Bureau of Investigation (FBI), it was revealed that since 2018, the federal government had allocated a total of $18 billion to 14 public projects in Minnesota, with the amount involved in the case reaching as high as $9 billion. This case is one of the largest welfare fraud incidents in U.S. history.
What makes this case truly politically explosive is that it occurred in Minnesota.
Minnesota has long been a solid voting bloc for the Democratic Party, and a Democratic governor once served as Harris's running mate. It is also a state that heavily relies on welfare programs and has an unusually high density of nonprofit organizations. The welfare system here has, over the past several decades, developed a structure of "outsourced governance": instead of directly providing services, the government delegates a large number of public functions to nonprofit organizations. In theory, this is intended to improve efficiency and promote community self-governance; in practice, however, it has created an extremely permissive and poorly regulated gray area, where political connections are deeply intertwined.
Many of the involved organizations are closely linked to the local Democratic Party's political ecosystem. Evidence indicates that a significant portion of the funds fraudulently obtained by these welfare fraud organizations flowed into donations for Democratic Party campaign funds.
Meanwhile, Minnesota itself is a highly immigrant-populated state, with large immigrant communities such as those of Somali descent. According to the Minnesota attorney general's office, out of the 92 defendants charged in this case, 82 were Somali Americans. This intertwines issues of immigration enforcement, welfare distribution, and public safety, directly touching on core issues where Democrats and Republicans have long been at odds. It also aligns with the policy commitments repeatedly emphasized by Trump and the Republican Party during their campaign.
Since someone handed a knife, of course the Republicans chose to drive it in deeply.
This time in the U.S., the biggest "internet celebrities," Trump and Musk, have repeatedly shared related content, strongly criticizing Minnesota's handling of the situation, and linking such opaque and potentially abused subsidy policies to the Democratic Party's long-standing expansion of social welfare programs.
Due to the exposure of welfare fraud cases in Minnesota, Trump significantly intensified immigration enforcement in the state. The Department of Homeland Security and the FBI dispatched numerous agents to continue investigations and conduct operations to remove undocumented immigrants. As a law enforcement agency under the Department of Homeland Security, ICE (Immigration and Customs Enforcement) became the main force in this operation.
But the sudden increase in law enforcement quickly led to serious consequences.
On January 7, an ICE agent accidentally killed 37-year-old Renee Good while enforcing the law locally, drawing nationwide attention. Just 17 days later, on January 24, another U.S. citizen, Alex Pretti, was also accidentally shot and killed by federal immigration enforcement officers in the same area.
Two consecutive fatal shootings have completely destabilized the situation in Minnesota. Large-scale protests and riots have erupted in the area, with the National Guard even being deployed to maintain order. Democrats have quickly seized this opportunity, using the fatal shooting by ICE in Minnesota as conclusive evidence of the agency's out-of-control law enforcement methods.
Citizens Spontaneously Mourn Victims Killed by Law Enforcement Officers
So, why would this matter affect the U.S. government shutdown on January 31?
In the U.S. constitutional system, the power of the purse lies with Congress, and the executive branch cannot independently decide to continue spending money. Each fiscal year, Congress must pass 12 annual appropriations bills, each corresponding to one of 12 policy areas: defense, homeland security, agriculture, transportation and housing, and so on. These appropriation bills determine the maximum amount of money each agency can spend and where the money can be spent during the fiscal year. If the appropriation proposals are not passed, or if the legal authority for the fiscal year expires and Congress has not yet passed new authorizations, the agency will have no budget and must shut down operations. This is what is known as a government shutdown.
The normal process is that the fiscal year begins on October 1. If an agreement is not reached before October 1, Congress typically passes a temporary spending bill to keep the government running and sets a new deadline. The January 30th date we are currently concerned about is the expiration date of this temporary bill. If, by that day, the formal spending bill has not been passed and the temporary bill is not extended, the U.S. government will shut down, or at least partially shut down.
However, these appropriation bills require approval first by the House of Representatives and then by the Senate. Currently, the House has completed its approval, but the process is stuck in the Senate.
The U.S. Senate requires 60 votes to pass a government spending bill. Currently, the Senate's composition is as follows: 53 Republican seats, 45 Democratic seats, plus two independent senators who align with the Democrats, giving the Democratic camp a total of 47 votes. Even if all Republicans "unanimously agreed," they would only have 53 votes, which is insufficient for the Republicans to unilaterally reach the 60-vote threshold needed to end debate.
This means that as long as the Democrats choose to unite in a filibuster, the Republicans must secure at least seven votes from the Democratic side in order to bring the funding bill to a final vote and thus avoid a government shutdown. This is also the reason why Trump has consistently called over the past several months for eliminating the procedural threshold requiring 60 votes.
In this context, within the current appropriations negotiations involving the risk of a government shutdown, the Department of Homeland Security budget—including ICE—has become the most controversial and difficult part to reach a consensus on.
There are many voices supporting the ICE enforcement on social media.
The Democrats' logic is clear: ICE caused two deaths in Minnesota, which demonstrates serious problems with the agency's law enforcement methods. Before substantial reforms and stricter limitations are imposed on ICE, what justification do we have for continuing to fund it? Democrats are calling for reducing the size of ICE, or at the very least, attaching strict restrictions.
The Republican stance is diametrically opposed: the $9 billion welfare fraud case in Minnesota, in which most defendants were of Somali origin, precisely demonstrates the need to strengthen rather than weaken immigration enforcement. ICE is a key force in combating illegal immigration and welfare fraud, and must be adequately funded.
This opposition directly led to a stalemate in Congress over the Department of Homeland Security's budget bill, which includes funding for ICE. The issue is likely to become a partisan "ammunition" heading into the year-end midterm elections and could become one of the key battlegrounds.
The oft-discussed "Obamacare"
In addition to the ICE funding issue, the question of healthcare subsidies constitutes the second and more "structural" point of contention contributing to the risk of another U.S. government shutdown. This dispute is also a lingering issue from the previous shutdown, which was only temporarily postponed and has not been genuinely resolved: whether to continue increasing the budget for subsidies under the "Affordable Care Act" (commonly known as Obamacare).
These subsidies were initially introduced as temporary measures during the COVID-19 pandemic, significantly reducing the actual cost of purchasing health insurance for middle- and low-income individuals through tax credits. They were not made permanent after the pandemic and officially expired at the end of last year. Due to the failure of Democrats and Republicans to reach an agreement on funding authorization, this issue was "frozen" during the previous government shutdown but did not disappear—it has simply been postponed until now.
Democrats hope to increase the budget. If subsidies are not extended, health insurance premiums for millions of Americans will sharply rise in the short term, and some may even be forced to completely exit the insurance system. However, the Republican opposition is similar in context and reasoning to the Minnesota welfare fraud case. The health insurance subsidy system during the pandemic has already given rise to systemic fraud. The ACA subsidies are not merely a fiscal burden but have become a "gray fund pool" exploited by local non-profit organizations, insurance companies, and even political networks.
Politics affects people's livelihood, and people's livelihood also influences politics.
During the period of contention between the two parties over determining this healthcare budget, there were intricate connections to events that were widely discussed online.
For example, the recent popular theory in Chinese-speaking communities known as the "American One-Strike Kill Line": many American households are not extremely poor; they have jobs, income, and health insurance. However, their financial safety margin is extremely low. Once they face unemployment, serious illness, or unexpected injuries, or when health insurance subsidies expire and premiums rise, their family cash flow can be completely drained in a very short time, plunging them into a situation from which they cannot recover on their own. Mortgage defaults, credit card delinquencies, and medical bills growing like a snowball usually happen almost simultaneously. It's like a video game character whose health points drop to a critical level—no need for a series of attacks; just one critical hit is enough to knock them out of the game entirely.
And ACA subsidies are precisely the final buffer for many families to avoid triggering this "death spiral." They don't make people wealthy, but they prevent people from falling completely out of the system after a single illness or job loss. This is also why Democrats frame the issue of subsidies as an "affordability crisis," rather than "welfare expansion."
It is precisely in this social context that the case, which once sparked widespread public debate—a 26-year-old wealthy third-generation graduate from an Ivy League university who shot the CEO of the largest insurance company in the U.S.—comes to fulfill the American public's modern imagination of a "folk hero."
Luigi, the suspect in the CEO's shooting
That symbolized insurance company CEO became a casualty. Healthcare issues are no longer just policy debates; they are eroding the foundation of societal security.
When people begin to use extreme events to express their despair toward a system, it indicates that the space for discussion within that system has become seriously imbalanced. The ACA subsidy dispute has been pushed to the intersection of Congress, elections, and government shutdowns precisely within this imbalanced context.
Will this shutdown hit the cryptocurrency market again?
So, will the impact of this U.S. government shutdown cause a crash in the cryptocurrency market, just like last time?
The editor feels there will still be negative effects, but the extent might not be as severe as last time.
The main reason is that Congress has already passed six of the 12 annual appropriations bills. This means that if a comprehensive agreement is not reached by the end of January, a government shutdown would be a "partial shutdown," rather than a full shutdown. Compared to the one in October 2025, this is a fundamental difference.
The previous government shutdown was caused by the entire budget system failing, lasting 43 days and setting a historical record. This time, even if a shutdown occurs, it would mainly affect the Department of Homeland Security and a few other agencies that have yet to receive approved funding. At present, however, the cryptocurrency market seems to have already anticipated this possibility, and prices have dropped in advance. Related reading:Why is Bitcoin's price continuously falling?》.
In addition, the impact of this government shutdown on the cryptocurrency industry may also be reflected at the regulatory level.
Once the budget deadlock continues, the entire political energy of Congress will be forced to focus on the lowest-priority goal of "avoiding a full government shutdown," while other issues—especially those requiring bipartisan coordination and involving complex technical details—will be systematically postponed. Most critically, this includes the "Digital Asset Market Clarity Act" (Clarity Act), which has drawn significant attention from the cryptocurrency industry.
The significance of this bill does not lie in short-term stimulus, but in institutional certainty: clarifying whether digital assets are classified as securities or commodities, delineating the regulatory boundaries between the SEC and the CFTC, and providing compliance benchmarks for exchanges, DeFi projects, and institutional capital.
The bill has already passed through the House of Representatives in July and was originally expected to be considered by the Senate in January. However, if the government shuts down again, this timeline is very likely to be delayed once more.
This won't immediately suppress the cryptocurrency price, but it will slow down the pace at which institutional funds enter the market and weaken the certainty of mid-to-long-term narratives.
Overall, even if the U.S. government shuts down again in January, its direct impact on financial markets, especially on cryptocurrency prices, is unlikely to cause market turbulence as severe as the previous shutdown. The current shutdown risk is already widely anticipated and is expected to be less severe in scale.
But we can see more of the "prelude" to the midterm elections at the end of the year in this U.S. government shutdown incident.
Whether it is the ICE funding, the ACA health care subsidies, or the back-and-forth battles over welfare fraud and the affordability of health insurance, these controversies are closely tied to voters' daily lives and are easily transformed into clear, polarized, and shareable political narratives. The government shutdown is evolving from a budgetary failure into a political battleground where both sides are laying the groundwork for the midterm elections at year's end, setting the tone for the political and policy developments in the coming months.