US Markets Bounce Back as Liquidity Returns After Six-Week Government Shutdown – What’s Next?
- How Did the Government Shutdown Impact Market Liquidity?
- Why Is Ark Invest Doubling Down on Coinbase?
- What’s Driving the Fed’s Potential Rate Cut?
- How Are Crypto Markets Reacting?
- What’s Next for Investors?
- FAQs
After a six-week government shutdown that choked liquidity, US markets are showing signs of revival as billions flow back into the economy. Ark Invest reports a $70 billion injection since November 12, with another $300 billion expected in the coming weeks. Bitcoin surges past $90,000, and Cathie Wood reaffirms her bullish $1.5 million BTC price target for 2030. Meanwhile, the Fed hints at a December rate cut, and Ark makes a $16.5 million bet on Coinbase. Here’s the full breakdown.
How Did the Government Shutdown Impact Market Liquidity?
The US financial system hit a historic low of $5.56 trillion in liquidity on October 30, per Federal Reserve and Treasury data. The six-week government freeze blocked roughly $621 billion from entering markets. Since the shutdown ended on November 12, nearly $70 billion has flooded back, with Ark Invest projecting an additional $300 billion infusion over the next 5–6 weeks. "The liquidity crunch that stalled crypto and AI growth is reversing," tweeted Ark CEO Cathie Wood. Markets are now pricing in a 90% chance of a Fed rate cut in December (CME data).
Why Is Ark Invest Doubling Down on Coinbase?
Ark Invest snapped up $16.5 million worth of Coinbase (COIN) shares across three ETFs—ARKK, ARKW, and ARKF—marking its largest move since August 1. COIN rallied 4.27% to $264.97 post-announcement, later climbing to $268.68 after hours. bitcoin mirrored the optimism, jumping 4.8% to $90,650. "Stablecoins are absorbing some of Bitcoin’s original use cases, but gold’s outperformance surprised us," Wood noted during a Monday webinar, maintaining her $1.5 million BTC price target for 2030.
What’s Driving the Fed’s Potential Rate Cut?
Economic indicators are flashing warning signs: September’s unemployment hit 4.44%, ADP reported 13,500 job losses last week, retail sales slowed, and PPI (ex-agriculture) missed forecasts. With the Treasury’s general account bloated at $892 billion (vs. a normal $600 billion), liquidity is primed to rebound. The Fed may also halt quantitative tightening (QT) by December 1, further loosening conditions. "Ending QT will incentivize risk-taking," Ark analysts wrote.
How Are Crypto Markets Reacting?
Bitcoin’s break above $90,000 fueled gains across Ark’s ETFs: ARKK rose 1.51% to $78.47, ARKW gained 1.82% to $150.10, and ARKF surged 2.40%. Traders on BTCC and other platforms are betting big on a year-end rally, especially with stablecoins like USDT absorbing demand as "digital safe havens." Wood’s April prediction of BTC reaching $1.5 million by 2030 (or $300,000 in a bear case) remains unchanged, though she admits stablecoins have "complicated the narrative."
What’s Next for Investors?
All eyes are on the Fed’s December meeting. If rates drop as expected, expect a liquidity tsunami—bullish for both stocks and crypto. Ark’s COIN purchase signals confidence in crypto’s infrastructure play, while Bitcoin’s resilience at $90k suggests institutional appetite is growing. Just remember: This article does not constitute investment advice. Do your own research—maybe start with TradingView charts or CoinMarketCap data.
FAQs
How much liquidity returned to markets after the shutdown?
About $70 billion has re-entered since November 12, with $300 billion more anticipated by year-end.
Why did Ark Invest buy Coinbase shares?
Ark sees long-term value in crypto infrastructure, allocating $16.5 million across three ETFs.
Will the Fed really cut rates in December?
Markets think so—CME data shows a 90% probability, driven by weak jobs and retail numbers.
