Should the shutdown drag on, however, it risks derailing efforts to pass crypto market structure legislation, Arca research head warned.
Despite a shaky start to the day, cryptos held on to most of their overnight gains as optimism around a possible government shutdown resolution helped steady risk sentiment.
Following sizable gains late on the weekend, bitcoin BTC$105,655.63 dropped 1.5% around the time of the U.S. stock market open but bounced back to trade near $106,000 by late afternoon, recovering much of the ground lost earlier in the day. Ether ETH$3,543.00 slipped 0.5% to just under $3,600, while Solana’s SOL ticked up 1.1% to $167.
Among other altcoins, XRP led gains up 9% amid growing anticipation that a spot-based ETF may soon start trading on U.S. exchanges. Zcash ZEC$529.97 and Monero XMR$386.07, which had posted outsized gains in recent weeks, cooled off and declined 9% and 11%, respectively.
Crypto-related equities saw upside as well following big losses last week. Coinbase (COIN) rose 4.1%, Robinhood (HOOD) gained 4.8%, eToro (ETOR) added 9%, and Gemini (GEMI) climbed 5.2%.Traditional markets also rallied, with the S&P 500 up 1.6% and the Nasdaq gaining 2.2%.
The rebound in crypto prices came as traders grew more confident that the longest-running U.S. government shutdown, now stretching to 39 days, may be nearing its end. A Sunday night post by Donald Trump teasing a $2,000 “dividend” funded by tariff revenues added to the upbeat mood. Checking on Polymarket odds, prediction market traders now place an 86% chance that the shutdown could be over between November 12-15.
Still, the shutdown has created a mixed backdrop for crypto, argued David Nage, head of research at digital asset investment firm Arca, in a Monday note.
On the positive side, the end of the shutdown could release $150-200 billion from the Treasury General Account (TGA) into bank reserves, he said. That liquidity jolt has historically benefited risk assets, including crypto.
But Nage also warned that the ongoing shutdown is stalling crucial legislative progress, including the CLARITY Act and the Senate’s digital asset market structure bill. With time running out before the 2026 midterms, a prolonged delay could push U.S. digital asset regulation off the table for a while, he explained.
“If comprehensive digital asset legislation is delayed until 2026 and then dies in midterm politics, the industry will miss out on the regulatory clarity needed to attract institutional capital and achieve sustainable growth.”
The shutdown’s impact on crypto policy has been quiet but potentially more damaging than the recent volatility in repo markets, he said. “The larger story for digital asset adoption over the next three to five years is being shaped behind the scenes… and the Banking Committee staff rooms are currently dark due to the shutdown,” Nage explained.
“If the shutdown ends in November, we may benefit from both a liquidity injection and a legislative opportunity,” he said. “If it drags into December, the legislation may miss its window.”
