The prolonged U.S. government shutdown, now in its second month, is generating a liquidity freeze that is directly reflected in Bitcoin's on-chain metrics. According to the Congressional Budget Office (CBO), this fiscal paralysis threatens to cut U.S. GDP by up to 2% in the fourth quarter and is draining capital from the crypto market.
Key on-chain data reveals three critical trends: BTC reserves on exchanges have risen for the first time in six weeks, signaling a defensive posture or preparation for selling. Simultaneously, miner reserves have fallen to their lowest levels since mid-2025, suggesting forced sales to cover operational costs as subsidies are suspended. Additionally, stablecoin withdrawals from exchanges have reached all-time highs, indicating a clear rotation from risk assets to safe-haven assets like USDT and USDC.
This capital contraction has plunged the Fear & Greed Index to Extreme Fear levels, similar to those seen during the 2023 banking crisis. Further pressure comes from a 26% drop in active Bitcoin addresses over the past year, reflecting retail investor withdrawal, and massive selling activity, including over $1 billion in Bitcoin dumped on Binance and ETF outflows from major players like BlackRock, Fidelity, and Grayscale.
Although the CBO expects an economic rebound once the shutdown ends, on-chain data suggests investor confidence will take longer to recover. As of the reporting time, BTC was trading at approximately $104,541, down 2.43% over 24 hours and 8.38% over the past week.
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