The price of Bitcoin (BTC) experienced significant volatility tied directly to U.S. political proceedings, dropping sharply before rebounding after the House of Representatives passed a critical $1.2 trillion government funding package on February 4, 2026. The bill, passed by a narrow 217-214 vote, averted a partial government shutdown that would have delayed economic data and stressed financial markets.
During the hours of uncertainty leading up to the vote, Bitcoin slid to around $72,800-$73,000. According to analytics firm Santiment, the sell-off triggered approximately $30 million in DeFi liquidations and mirrored a synchronized drop in traditional assets like the S&P 500 and even gold. This correlation indicated a broad reduction in risk exposure by traders due to the political standoff, not crypto-specific news.
The immediate market relief was pronounced. Following the bill's passage, Bitcoin bounced from its lows, climbing over 5% within hours as fears of political dysfunction subsided. The speedy recovery suggested the sell-off was driven by temporary risk aversion rather than a fundamental reevaluation of Bitcoin's value.
Despite this short-term catalyst, Bitcoin faces broader headwinds. Data shows the asset is down nearly 14% over the past week and 17% for the month. Analysis from Galaxy Digital highlights deteriorating on-chain metrics, with research head Alex Thorn noting that 46% of Bitcoin's circulating supply is now "underwater," meaning it was last moved at higher prices, which can increase selling pressure. Furthermore, large holders, or "whales," have reportedly dumped 50,181 BTC over two weeks while retail investors accumulated coins.
Additional pressures include geopolitical news, such as reports on February 3 that Iran was seeking to shift the format of nuclear talks with the U.S., which contributed to another leg down in Bitcoin's price below $75,000. Some analysts, like Doctor Profit, have revised downside targets, suggesting a potential cycle bottom between $44,000 and $54,000. The key question remains whether the resolution of immediate U.S. political risk is enough to reverse these negative technical and on-chain trends.
