Here’s How US Funding Calms Markets and Raises Bitcoin

Bitcoin dropped to $72.8K during US shutdown fears, then rebounded after lawmakers passed a funding bill.

Bitcoin (BTC) fell to around $72,800 yesterday as US lawmakers debated a stopgap funding package before resuming if the House passes the bill on February 4, 2026, easing fears of a government shutdown.

The quick turnaround showed how closely crypto prices still track US political risk, even if no blockchain-specific news is involved.

Stop Fearing Ripple With Crypto

According to a February 4 report by on-chain analytics company, Sentiment, the sell-off occurred during the US trading session when headlines pointed to a strong vote in the House. As the uncertainty built, BTC fell rapidly, which caused nearly $30 million in DeFi terminations and mirrored a synchronized decline in the S&P 500 and even gold, a commodity often considered a safe haven.

This correlation indicates that traders were reducing exposure to volatile assets in general due to political stance, not crypto-specific issues.

Concerns centered on whether Congress would approve an estimated $1.2 trillion in funding to keep most government agencies operating until Sept. 30. A failure would lead to a partial shutdown, delayed economic data and added pressure to an already cautious market.

The tense vote saw a split among Republicans, with one representative voting against the bill because of its foreign aid provisions.

However, the bill eventually passed, averting a shutdown and causing markets to react with immediate relief. Bitcoin bounced back from its lows, rising more than 5% within hours, and the S&P 500 also recovered. According to Santiment, the quick recovery showed that fear of political dysfunction, rather than a reevaluation of Bitcoin’s value, was the cause of the earlier sell-off.

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Widespread Pressure on Bitcoin Price

While the financial bill news provided a clear short-term boost, Bitcoin is still facing broader headwinds. According to data from CoinGecko, the asset is down about 14% in the past seven days and 17% for the month.

A recently published analysis from Galaxy Digital showed a deterioration in on-chain metrics, with head of research Alex Thorn noting that 46% of Bitcoin in circulation is now “underwater,” meaning it has ended up being moved at high prices, which could increase sales pressure. He also pointed out that there is a big lack of gathering of big owners.

In addition, on February 3, reports that Iran wanted to change the format of the nuclear negotiations with the US contributed to another leg down in the price of Bitcoin, pushing it below $75,000 and burning at least $20 million of exit positions.

In addition, some analysts such as Dr. Profit revised their downward targets, saying that the lower cycle could reach a range between $44,000 and $54,000. However, the important question is whether the resolution of the immediate US political crisis will be enough to change these negative technical and on-chain trends, or if BTC is still vulnerable to a deep test of support.