Ether Plunges to $4K as BTC, XRP Tumble Amid Mounting U.S. Government Shutdown Fears

Crypto markets hit turbulence as political gridlock rattles investors.

Market Meltdown

Ethereum leads the selloff, slicing through the $4,000 support level like a hot knife through butter. Bitcoin and XRP join the descent, painting charts red as Washington dysfunction triggers risk-off sentiment. Treasury yields spike while digital assets bleed—classic correlation or just Wall Street doing its usual panic dance?

Shutdown Showdown

Lawmakers play chicken with the federal budget, threatening the first government closure in years. Crypto traders dump positions faster than politicians empty promises. The $4K ETH level becomes a battleground—once seen as solid footing, now just another casualty in D.C.'s fiscal theater. Meanwhile, traditional finance pundits clutch pearls over 'volatile' crypto while their own system teeters on congressional whims.

Silver Linings Playbook

History shows crypto dips attract buyers faster than a bull market FOMO rally. Remember—governments can shut down, but blockchain never sleeps. The very decentralization that skeptics mock becomes the system's armor when centralized powers falter. As one veteran trader quipped: 'My ledger doesn't care if politicians get paid this month.'

BTC, ETH under pressure

Ether fell over 3% in Asia, almost testing $4,000 for the first time Aug. 8, with bitcoin (BTC) falling over 1% to under $112,000. Other major tokens such as XRP (XRP), solana (SOL) and Dogecoin (DOGE) fell by 2.6% to 3%. Solana’s SOL appeared set to break below $200.

The CoinDesk 20 Index was down 2% at 3,940 points. Meanwhile, futures tied to the S&P 500 and Nasdaq, traded flat to positive.

Although the exact cause of the cautious crypto market sentiment was not clear at the time of writing, growing concerns about a potential government shutdown may have contributed to the risk-averse mood among investors.

Furthermore, overnight comments from San Francisco Fed President Mary Daly reiterated her support for further rate cuts, but declined to provide a timeline, instead stressing data dependence, which may have hurt sentiment.

The Fed cut rates by 25 basis points on Sept. 17 while hinting at two more rate cuts by the year’s end. Since then, policymakers, including Chairman Jerome Powell, have signaled a cautious approach to future rate cuts.

Seven Fed officials, including the New York Fed’s Williams, are scheduled to speak on Thursday. Meanwhile, traders are awaiting Friday’s PCE data, the Fed’s preferred measure of inflation.

“If inflation pressures appear contained, markets may interpret this as room for further Fed cuts, providing liquidity tailwinds into Q4. That could be the catalyst for BTC to attempt a long-anticipated breakout,” the market insights team at Singapore-based QCP Capital said.

www.coindesk.com

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