US Markets Rebound as Liquidity Returns After Six-Week Government Shutdown – What’s Next for Investors in 2025?
- How Did the Government Shutdown Impact US Market Liquidity?
- Why Did Ark Invest Bet Big on Coinbase (COIN)?
- What’s Driving Cathie Wood’s $1.5M Bitcoin Price Target?
- How Are Broader Economic Indicators Shaping Market Sentiment?
- FAQs: Your Burning Questions Answered
The US financial markets are showing signs of recovery following a six-week government shutdown that drained liquidity to multi-year lows. With $70 billion already injected post-shutdown and another $300 billion expected in the coming weeks, analysts are eyeing a bullish turnaround. Meanwhile, Ark Invest’s massive Coinbase (COIN) purchase and Cathie Wood’s unwavering $1.5M bitcoin price target add fuel to the crypto rally. Here’s a deep dive into the data, trends, and what it means for your portfolio.
How Did the Government Shutdown Impact US Market Liquidity?
The six-week US government shutdown, which ended on November 12, 2025, starved the financial system of approximately $621 billion in liquidity, according to Federal Reserve and Treasury data. By October 30, overall liquidity had plummeted to $5.56 trillion—the lowest level in years. Post-shutdown, $70 billion has already re-entered the economy, with Ark Invest projecting an additional $300 billion infusion over the next 5-6 weeks. This liquidity crunch had notably suppressed crypto and AI-related markets, but the tide appears to be turning.
Why Did Ark Invest Bet Big on Coinbase (COIN)?
On November 26, Ark Invest made headlines with a $16.5 million purchase of Coinbase shares (COIN), its largest since August 1. The acquisition spread across three ETFs: ARKK (Innovation), ARKW (Next-Gen Internet), and ARKF (Fintech). At publication time, COIN surged 4.27% to $264.97, later climbing to $268.68 in extended trading. bitcoin also reclaimed the $90K threshold, trading at $90,650 (+4.8%). Analysts attribute this rally to expectations of a Fed rate cut in December—a sentiment echoed by Cathie Wood, who tweeted that the liquidity squeeze is "set to reverse imminently."
What’s Driving Cathie Wood’s $1.5M Bitcoin Price Target?
Despite stablecoins encroaching on Bitcoin’s role as a safe-haven asset, Ark Invest’s CEO reiterated her $1.5M bull-case BTC valuation during a recent webinar. Wood acknowledged that stablecoin adoption progressed faster than expected, but Bitcoin’s "digital gold" narrative remains intact. Her April 2025 forecasts—$1.5M (bull) and $300K (bear)—stand unchanged. Notably, the Fed’s dovish signals (90% odds of a December rate cut per CME data) and an inflated Treasury General Account ($892B vs. $600B norm) suggest liquidity tailwinds ahead.
How Are Broader Economic Indicators Shaping Market Sentiment?
Recent data paints a mixed picture: September’s unemployment rate (4.44%), last week’s ADP job losses (13,500), slowing retail sales, and softer PPI Core readings all point to a potential Fed pivot. The central bank is also expected to halt Quantitative Tightening (QT) by December 1, which could further boost investor risk appetite. As liquidity returns, platforms like BTCC are seeing renewed trading activity—especially in crypto derivatives tied to macro trends.
FAQs: Your Burning Questions Answered
How much liquidity was lost during the shutdown?
Approximately $621 billion failed to enter the market during the six-week shutdown, with liquidity bottoming at $5.56 trillion on October 30.
What’s the outlook for Bitcoin post-shutdown?
With Fed rate cuts looming and QT ending, analysts expect improved liquidity to benefit BTC. Ark Invest’s models still target $1.5M long-term.
Why did COIN shares rally after Ark’s purchase?
The $16.5M buy-in signaled institutional confidence, coinciding with broader crypto gains as Bitcoin topped $90K.
