US Markets Bounce Back as Liquidity Returns After Six-Week Government Shutdown – Key Insights for 2025
- How Did the Government Shutdown Impact US Market Liquidity?
- Why Did Ark Invest Bet Big on Coinbase (COIN)?
- What’s Driving Bitcoin’s Rally Above $90K?
- How Are Ark’s ETFs Performing?
- What’s Next for Fed Policy and Market Liquidity?
- FAQs: Your Burning Questions Answered
The US financial markets are showing strong signs of recovery following a six-week government shutdown that drained liquidity. With $70 billion already injected post-shutdown and another $300 billion expected in the coming weeks, analysts are bullish. Ark Invest’s latest moves, including a $16.5 million Coinbase (COIN) purchase, highlight renewed confidence. bitcoin surges past $90K, and Fed rate cuts loom. Here’s the full breakdown.
How Did the Government Shutdown Impact US Market Liquidity?
The six-week government shutdown, which ended on November 12, 2025, squeezed liquidity to a multi-year low of $5.56 trillion by October 30, per Federal Reserve and Treasury data. Approximately $621 billion was frozen out of the markets during the shutdown. Since reopening, $70 billion has re-entered, with Ark Invest projecting an additional $300 billion infusion over the next 5–6 weeks. This liquidity crunch had notably dampened crypto and AI market rallies, but the tide is turning.
Why Did Ark Invest Bet Big on Coinbase (COIN)?
Ark Invest, led by Cathie Wood, made headlines with a $16.5 million purchase of Coinbase shares (COIN) across three ETFs: ARKK, ARKW, and ARKF. The move, their largest since August 1, sent COIN up 4.27% to $264.97, with a post-market bump to $268.68. Wood’s team has long been crypto-optimistic, famously predicting Bitcoin could hit $1.5 million by 2030 in a bullish scenario. The buy signals confidence in crypto’s rebound as liquidity returns.
What’s Driving Bitcoin’s Rally Above $90K?
Bitcoin (BTC) surged 4.8% to $90,650, buoyed by expectations of Fed rate cuts in December. CME futures data shows a 90% probability of a short-term rate reduction. Meanwhile, the Treasury General Account remains bloated at $892 billion (vs. a normal $600 billion), hinting at imminent liquidity injections. As Wood noted on X: "The liquidity squeeze that held back crypto and AI is reversing."
How Are Ark’s ETFs Performing?
Ark’s ETFs rode the wave: ARKK rose 1.51% to $78.47, ARKW gained 1.82% to $150.10, and ARKF jumped 2.40% to $48.78. The funds’ exposure to Coinbase and crypto-linked assets paid off as market sentiment shifted. Trading volume on exchanges like BTCC spiked, reflecting renewed retail interest.
What’s Next for Fed Policy and Market Liquidity?
The Fed is expected to end quantitative tightening (QT) by December 1, halting its balance-sheet runoff. Combined with potential rate cuts, this could unleash pent-up liquidity. September’s 4.44% unemployment rate, weak retail sales, and softer PPI data further support easing. As one BTCC analyst put it: "The Fed’s pivot is like flipping a switch for risk assets."
FAQs: Your Burning Questions Answered
How much liquidity is returning to US markets?
Post-shutdown, $70 billion has re-entered, with $300 billion more anticipated by early 2025.
Why did Ark Invest buy COIN shares?
Ark sees Coinbase as a key beneficiary of crypto’s resurgence amid improving liquidity conditions.
Is Bitcoin’s rally sustainable?
While Fed policy supports short-term gains, volatility remains likely. Always DYOR (do your own research).
