Peter Zhang
Nov 09, 2025 20:56
The US government shutdown has impacted liquidity in the crypto markets, causing a significant shift in capital flow and market dynamics, according to HTX’s latest report.
Impact of US Government Shutdown on Crypto Liquidity
The recent US government shutdown has had a profound impact on liquidity within the cryptocurrency markets, according to a report by HTX. With Treasury spending frozen, the Treasury General Account (TGA) balance surged from approximately $800 billion to over $1 trillion, effectively withdrawing around $200 billion from financial markets and tightening funding across the banking system.
Structural Changes in the Crypto Market
As of November 2025, the cryptocurrency market is at a structural turning point. With fiscal expansion winding down and interest rates peaking, liquidity is shifting back to the private sector. The report highlights that Bitcoin (BTC) is now acting as the base collateral layer, while Ethereum (ETH) remains the settlement hub. New capital is flowing towards Layer 2 solutions, AI, robotics, decentralized physical infrastructure networks (DePIN), and other emerging sectors.
Market Dynamics and Investor Sentiment
HTX’s report suggests that the current market conditions mark a mid-cycle rotation rather than the end of a trend. The global crypto market cap stands at approximately $3.37 trillion, experiencing a pullback from recent highs. The Fear & Greed Index indicates a reading of 29, signaling a low-risk appetite but high opportunity for long-term capital accumulation.
Macro Mechanics and Market Rotation
With inflation easing and rate expectations lowering, the US government’s inability to disburse funds during the shutdown has created an unexpected liquidity sink. This has pressured high-beta cyclicals while sectors like AI and infrastructure-linked tech have outperformed. Bitcoin’s volatility has decreased, positioning it as a stable collateral base, while Ethereum continues to facilitate liquidity rotation into higher-beta ecosystems.
Sector Outlook and Future Trends
Looking ahead, the report identifies several sectors poised for growth, including presales, memecoins, AI, and information finance (InfoFi). The focus is on executing a full investment loop: discovery, allocation, exit, and recycling. The next cycle’s alpha is expected to come from the convergence of narrative, technology, and distribution.
Risks and Opportunities
Despite regulatory uncertainties and on-chain complexities, the structural bull market in crypto remains intact. The report emphasizes the importance of narrative recognition, liquidity tracking, and mechanism anticipation as key strategies for navigating the evolving market landscape.
For more detailed insights, you can read the full report on [HTX’s Medium page](https://htxofficial.medium.com/htx-crypto-macro-report-u-s-government-shutdown-drains-liquidity-b9c8cea84b17).
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