The crypto market suffered a sharp decline over the weekend as Bitcoin fell below $87,000 and total market value dropped by $100 billion. The selloff came as traders reacted to multiple threats affecting market stability.
President Trump announced plans for 100% tariffs on Canada if the country makes any trade deals with China. This threat immediately impacted market sentiment and triggered widespread selling across crypto assets. Bitcoin briefly touched $86,000 before recovering slightly.
The tariff announcement came at a time when the crypto market was already showing weakness. Over $360 million in leveraged positions were liquidated in the past 24 hours. Long positions accounted for $324 million of these liquidations.
Senate Democrats said they will block a federal funding bill if it includes money for the Department of Homeland Security. Senate Democrat Leader Chuck Schumer cited concerns about ICE operations following a fatal shooting in Minneapolis on Saturday. The Democrats want reforms to DHS spending before supporting the appropriations bill.
The House of Representatives passed the funding bill last week. The measure then moved to the Senate for consideration. Without Democratic support, the bill faces an uncertain future in the upper chamber.
Prediction markets now show an 80% chance of a government shutdown by January 31. Kalshi odds jumped from below 10% on Saturday to 78.6% on Sunday. Polymarket showed similar movement to 80% odds.
BREAKING:
There is now a 78% chance of a US government shutdown next week.
We are f*cked. pic.twitter.com/010gYmc0LU
— Ash Crypto (@AshCrypto) January 25, 2026
A shutdown would halt progress on pending crypto legislation. The CLARITY Act currently sits on the Senate agenda awaiting action. Any shutdown could delay this bill for several more weeks.
The last government shutdown ran for 43 days from October 1 to November 12. During that period, Bitcoin fell from its all-time high of $126,080 to below $100,000. Multiple factors drove that decline, including the October 10 market crash.
Bitcoin dropped 3.4% over the past 24 hours as of Sunday evening. Ethereum performed worse with a 5.3% decline in the same period. Other altcoins also posted losses as bearish sentiment spread through the market.
Buckle up for a huge week ahead:
1. Markets React to 100% Canada Tariff Threat – Tonight
2. Markets React to 75% Chance of Govt Shutdown – Tonight
3. January Consumer Confidence data – Tuesday
4. Fed Interest Rate Decision and Press Conference – Wednesday
5. Microsoft, Meta,…
— The Kobeissi Letter (@KobeissiLetter) January 25, 2026
The Crypto Fear and Greed Index fell five points on Monday to reach 20 out of 100. The index has remained in the “extreme fear” zone for six consecutive days. This metric tracks overall market sentiment based on multiple factors.
Canada responded to Trump’s tariff threats by saying they have no plans to make any deals with China. This statement did little to calm market fears. Traders remain concerned about potential trade war impacts.
The Federal Reserve will hold its first FOMC meeting of 2025 on Wednesday. The committee will decide whether to maintain current interest rates or make additional cuts. Most experts predict no rate change after the December cut of 25 basis points.
The December Producer Price Index inflation data will be released this week. Bitcoin prices typically react to inflation metrics. November PPI data came in above 3%, exceeding expectations and contributing to earlier market weakness.
Gold has outperformed Bitcoin since early October. This suggests investors prefer traditional safe-haven assets during periods of high uncertainty. The preference shift reflects ongoing concerns about geopolitical and economic stability.
US military deployments to the Middle East added to market anxiety. Rising tensions with Iran created another source of uncertainty for risk assets. These developments combined with domestic political issues to pressure crypto prices.
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