Ether Dips Below $4K as BTC and XRP Face Pressure Amid Growing U.S. Fiscal Uncertainty

Ether (ETH $3,958) led a decline in major cryptocurrencies Thursday during Asian trading hours, 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%, the highest since its January launch. Traders are pricing a 77% probability of a shutdown by Dec. 31, with the odds of a shutdown by Oct. 1 at 63%.

Reports indicate the White House is preparing for potential large-scale furloughs and staff cuts if Congress fails to pass a funding measure. On Wednesday, the Office of Management and Budget issued guidance directing agencies to draft contingency plans in case spending legislation is not approved next week.

The government is projected to run out of funds by the end of September. To prevent a shutdown, Congress must either approve a short-term continuing resolution or pass the 12 full-year appropriations bills, which typically require bipartisan support to meet the 60-vote threshold.

Cryptocurrency Markets React

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

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

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

The Federal Reserve cut rates by 25 basis points on Sept. 17 and hinted at two more cuts by year-end, though policymakers, including Chairman Jerome Powell, have signaled a cautious stance. Seven Fed officials, including New York Fed President John Williams, are scheduled to speak Thursday, ahead of Friday’s PCE inflation report, the Fed’s preferred measure of price pressures.

Market Outlook

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