Crypto Dump Pauses With End of US Shutdown: Relief or Dead Cat Bounce?

Ben Graham · February 4

Crypto prices stopped their fall after the US House passed a funding deal that reopened the government. Bitcoin briefly sank to $72,800 before climbing back near $76.280, still down 3.2% on the day. This appears to be a temporary end to the US shutdown rather than the final conclusion.

The U.S. House of Representatives concluded a brief but tense fiscal standoff by passing a funding package with a narrow 217–214 vote. This legislative action effectively ended a four-day partial government shutdown that had commenced on January 31.

GOV SHUTDOWN UPDATES

This isn’t the end of the shutdown

It’s a delay

Congress moved a procedural lever, rushed a funding stopgap, and left DHS hanging on a short leash until February.

Headlines will say crisis averted, but all they did was reschedule it

Trump signs.… pic.twitter.com/mcGsFpxhtS

— Draxen (@Draxen_Web3) February 4, 2026

President Trump finalized the measure hours later, securing full-year funding for most federal departments through September. But what caused this new government shutdown?

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The DHS Drama: End Of The US Shutdown For Now

Most of the government got its long-term funding secured, but the Department of Homeland Security (DHS), home to ICE, CBP, Coast Guard, and more, remains on a tight leash. It’s running on a two-week continuing resolution (CR) that expires February 13, 2026.

This short fuse stems from a heated partisan clash over immigration enforcement. It escalated after two tragic murders of US citizens by federal agents in Minneapolis earlier this month. Democrats pushed hard for reforms like mandatory body cameras, stricter warrant rules, and limits on operations, while Republicans held firm on backing aggressive enforcement under the current administration.

The compromise buys time for talks, but many in the space see it as “crisis delayed” rather than “crisis averted”, with another potential funding cliff just around the corner.

The ongoing uncertainty kept sentiment cautious even after the vote. While everyone’s attention is currently on Capitol Hill, predicting the next move from this administration is difficult, and the market reflects this.

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The Fear Of Another Prolonged US Shutdown

We saw the effect with the first government shutdown, and it’s not a surprise to see the market crash again this time. Ethereum felt even more pain. ETH trades near $2,266, down 2.6% in 24 hours and 26% over the week.

U.S. Bitcoin spot ETFs experienced substantial outflows of $272 million, with Fidelity’s FBTC leading at $149 million, signaling temporary pressure on BTC. Meanwhile, Ethereum, Solana, and XRP ETFs recorded modest inflows of $14M, $1.24M, and $19.46M respectively, hinting at early capital rotation toward altcoins rather than broad crypto exits.

On Feb. 3, U.S. Bitcoin spot ETFs saw $272 million in net outflows, led by Fidelity’s FBTC with $149 million in net outflows. In contrast, Ethereum spot ETFs recorded $14.06 million in net inflows, while Solana spot ETFs saw $1.24 million in net inflows and XRP spot ETFs… pic.twitter.com/tNT1sk4UMP

— Wu Blockchain (@WuBlockchain) February 4, 2026

Is This Bounce Something We Can Trust? Bitcoin Could Retest Lower Levels

Compass Point analysts argue Bitcoin’s bear phase may be nearing its final stage, with $60K–$68K identified as a key long-term support zone where many investors accumulated BTC. The $70K–$80K range is considered weak support, meaning price could move through it quickly amid ETF outflows and low demand.

A breakdown below $60K is seen as unlikely unless global equities enter a broader bear market. Longer term, growing corporate and institutional adoption suggests underlying demand remains intact despite near-term volatility.

Thanks to the end of the US shutdown, stocks bounced too, though the Nasdaq still sits down 2% on the day. That tells us fear has eased, not vanished. The current recovery reflects an immediate relief from the shutdown, but the “DHS cliff” on February 13 is the next major hurdle.

Until a permanent agreement is reached, the market is likely to remain sensitive to every development from the Capitol.

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