The US federal government shutdown, setting a new record for its unprecedented length, is exerting a strong influence on the global economy.
Damages and adverse effects are rapidly emerging across various economic sectors. Nevertheless, there is no sign of compromise on the political front.
Record-Breaking Standoff Deepens
As of Friday, the US government shutdown has entered its 38th day. This milestone officially surpassed the previous record of 35 days set during the 2018-2019 Trump administration. The shutdown, which began on October 1, 2025, stems from a budget impasse between Democrats and Republicans in Congress.
The human toll is substantial: approximately 750,000 federal workers are furloughed without pay. Consequently, essential aid programs for low-income families and children are halted. The strain is also visible in US transit, with major airport flight delays and cancellations surging by nearly 10%. This is occurring because air traffic controllers’ pay is suspended.
The halt in US fiscal policy has exacerbated market liquidity, and the cryptocurrency market is also suffering the consequences. Industry observers view the resolution of the shutdown as a potential momentum for a bullish reversal in the crypto market.
Liquidity Crisis Hits Crypto
A key financial side effect of the funding lapse is a severe tightening of market liquidity. With budget execution on hold, the balance in the US Treasury General Account (TGA) has ballooned to $983 billion—the highest level in a year. This represents money intended for circulation that has been locked away for over a month.
Financial influencer and RealVision founder, Raoul Pal, pointed to the TGA buildup as the source of the market stress. “Currently, the government shutdown has forced a sharp tightening of liquidity as the TGA builds up with nowhere to spend it. This is hitting markets, and in particular crypto, which is the most liquidity-driven,” Pal noted.
Pal predicts that the end of the government shutdown will serve as the upside momentum. This is the momentum needed to reverse the recent slump in the cryptocurrency market.
He expects that once the shutdown concludes, the Treasury will inject an estimated $250 billion to $350 billion back into the economy within a couple of months. “QT ends, and the balance sheet technically expands,” he stated.
When will the Government shutdown end? Source: Polymarket
Political Impasse Clouding Resolution
However, the path to ending the shutdown remains highly uncertain. A resolution requires Democrats and Republicans in Congress to agree on next year’s budget. According to US political publication Politico, a core sticking point is the Democratic demand to extend health insurance subsidies set to expire this year—a demand the Republican party strongly opposes.
Betting markets reflect the ongoing gridlock. Data from the prediction platform Polymarket shows that market participants currently view a resolution after November 16 (46%) as the most likely outcome. Furthermore, the platform indicates the possibility of a dramatic breakthrough this coming weekend (November 8–11) sits at only 32%.
