The longest government shutdown in history is finally coming to an end.

A government shutdown due to a budget impasse is almost unique to the US political system. The 40-day shutdown significantly impacted global financial markets. The Nasdaq, Bitcoin, tech stocks, the Nikkei index, and even safe-haven assets like US Treasury bonds and gold were not spared.

Even the most strained bipartisan relationship couldn't dampen everyone's desire to enjoy Thanksgiving before November 27th. The recently concluded Senate meeting finally secured the 60 votes needed to push through the budget, potentially ending the longest government shutdown in history and allowing the US government to reopen smoothly.

Why did the shutdown occur?

This shutdown stems from the failure of Republicans and Democrats to reach an agreement on the fiscal budget after October 1.

That day marked the expiration of the previous year's federal budget. Republicans currently control both the Senate and the House of Representatives, but they still lack the 60 votes needed to pass the budget in the Senate, giving Democrats significant negotiating leverage.

The core disagreement between the two sides centers on healthcare spending. Democrats are demanding an extension of the expiring tax credit to allow millions of Americans to continue enjoying lower Medicare costs, while also rescinding Trump's plan to cut Medicaid; Republicans insist on cutting health and government healthcare-related spending to control the overall budget.

Although the House of Representatives passed a temporary funding bill to avert a shutdown, the Senate refused to approve it, and the government officially shut down on October 1, marking the first shutdown in nearly seven years.

Sources familiar with the matter revealed that the turning point in this round of negotiations came from a preliminary agreement reached between at least eight moderate Democratic senators, Republican leaders, and the White House: in exchange for a future vote on extending the Affordable Care Act (Obamacare) subsidies, the government would "open its doors" first.

What are the consequences of the shutdown?

If we were to describe the impact of a government shutdown on the economy, "a hurricane" would be a very apt metaphor.

The first to be impacted were financing and business approvals: loan approvals and company listing reviews were severely delayed; approximately $800 million in federal contracts could not be signed daily; and contractors and suppliers, many of whom were small businesses reliant on government contracts, were unable to receive compensation.

This means that for every week the government shuts down, economic growth will decrease by 0.1–0.2 percentage points, which is equivalent to a loss of about $15 billion per week.

As the shutdown drags on, these losses will be harder to recover, especially potentially impacting the traditional peak season for consumption in November and December. As White House economic advisor Kevin Hassett warned, the impact of this shutdown is "far greater than expected," with him even suggesting that fourth-quarter growth could be halved from the previously projected 3% to 1.5%. Industries such as tourism, leisure, and construction have already been clearly "hurt."

The last major government shutdown in U.S. history occurred in 2018–2019, a 35-day shutdown due to the dispute over the U.S.-Mexico border wall. A subsequent study by the Congressional Budget Office found that it caused approximately $11 billion in economic losses. While most of these losses were subsequently mitigated, $3 billion remained a permanent loss.

This record-breaking shutdown has been particularly difficult for those in the cryptocurrency community who experienced it firsthand. Related reading: " Wall Street Continues to Sell Off, Where Will Bitcoin Fall Further? "

In the first week of November alone, Bitcoin had already fallen to even lower levels than during the "October 11th" crash, failing to hold the $100,000 mark and even dropping below $99,000, a new low in the past six months. Ethereum also hit a low of $3,000. A single BTC-USDT long position on the HTX trading platform was liquidated for $47.87 million, immediately topping the entire network's liquidation list.

As previously reported by Wall Street Insights, the shutdown forced the U.S. Treasury to surge its General Account (TGA) balance at the Federal Reserve from approximately $300 billion to over $1 trillion in the past three months, reaching a near five-year high. This process is equivalent to withdrawing more than $700 billion in cash from the market.

The market is short of money, and the cryptocurrency market has thus been drained of liquidity.

From October 29 to November 3, BlackRock's IBIT, the world's largest Bitcoin spot ETF with a 45% market share, saw a net outflow of $715 million over four trading days, accounting for more than half of the total outflow of $1.34 billion in the US Bitcoin ETF market.

Looking at the whole week, from October 28 to November 3, IBIT saw a net outflow of $403 million, accounting for 50.4% of the total outflow of $799 million in the entire market. On October 31, the outflow reached $149 million, setting a new record for the highest single-day outflow in the entire industry.

Even more formidable than ETFs are the established players on the blockchain.

Over the past 30 days (October 5 to November 4), wallet addresses that held Bitcoin for more than 155 days, commonly known as "long-term holders" (LTH), net sold approximately 405,000 BTC, representing 2% of the circulating supply. Based on an average price of $105,000 during this period, this equates to cashing out more than $42 billion.

When will the market rise?

Although the government funding plan has not yet been fully finalized, the market has already reacted, with US stock index futures rising sharply in early Asian trading.

We can also continuously track the following dimensions to help determine the future direction of fiscal policy and liquidity.

First, there's the U.S. Treasury General Account (TGA). Related reading: " Why does Bitcoin only rise when the U.S. government opens its doors? "

This can be understood as the U.S. government's central checking account at the Federal Reserve. All federal revenue, whether from taxes or proceeds from issuing Treasury bonds, is deposited into this account. All government spending, from paying civil servant salaries to defense spending, is also allocated from this account. Under normal circumstances, the TGA acts as a central hub for funds, maintaining a dynamic balance. The Treasury receives the money and then quickly spends it, with the funds flowing into the private financial system, becoming bank reserves, and providing liquidity to the market.

The government shutdown broke this cycle. The Treasury was still collecting money through taxes and bond issuance, and the TGA balance continued to grow. But because Congress did not approve a budget and most government departments were shut down, the Treasury was unable to spend as planned. The TGA became a financial black hole that only took in money and never gave out.

Since the shutdown began on October 10, 2025, the balance of TGA has ballooned from approximately $800 billion to over $1 trillion by October 30. In just 20 days, more than $200 billion was withdrawn from the market and locked in the Federal Reserve's vault.

US government TGA balance | Source: MicroMacro

The TGA (Transfer-Amount Gains) is the "cause" that triggered the liquidity crisis, while the soaring overnight lending rate is the most direct symptom of the financial system "fever".

The overnight lending market is where banks lend and borrow short-term funds to each other. It is the capillary of the entire financial system, and its interest rate is the most accurate indicator of the tightness of the money supply among banks. When liquidity is abundant, it is easy for banks to borrow money, and interest rates are stable. But when liquidity is dried up, banks begin to lack funds and are willing to pay higher prices to borrow money overnight.

Therefore, two other key indicators are derived here: SOFR (Secure Overnight Funding Rate) and the usage of the Federal Reserve's SRF (Standing Repurchase Facility).

On October 31, the SOFR surged to 4.22%, marking its largest daily increase in a year. This not only exceeded the Federal Reserve's 4.00% ceiling on the federal funds rate but also surpassed the Fed's effective funds rate by 32 basis points, reaching its highest point since the market crisis in March 2020. The actual borrowing costs in the interbank market have spiraled out of control, far exceeding central bank policy rates.

Secured Overnight Funding Rate (SOFR) Index | Source: Federal Reserve Bank of New York

The SRF (Special Functionary Relief) is an emergency liquidity tool provided by the Federal Reserve to banks. When banks cannot borrow money in the market, they can pledge high-grade bonds to the Federal Reserve in exchange for cash. On October 31, SRF usage surged to $50.35 billion, the highest level since the COVID-19 crisis in March 2020. The banking system was facing a severe dollar shortage, forcing it to tap into the Federal Reserve's last-ditch effort for help.

Standing Repurchase Facility (SRF) Usage | Source: Federal Reserve Bank of New York

Beyond the fiscal side, one can also track the pace of US Treasury issuance, the reaction of short-term interest rates, and the balance of RRPs (Reverse Repo Facility). A combination of "large-scale Treasury bond issuance + a significant decrease in the RRP balance" indicates that liquidity is being transferred from money market funds to Treasury bonds, further influencing the performance of risky assets. Furthermore, the Treasury's quarterly refinancing plan (QRA) announced at the end of the month is also an important signal for observing the government's cash needs and financing pressures.

In addition, there are still several key steps in the process that deserve attention. Even if the House of Representatives passes the bill, it still needs to go through the Senate's approval and the president's signature to become law.

According to relevant information, after passing the procedural vote, the Senate must amend three appropriations bills (legislation, military construction, and agriculture, including the SNAP program) before sending them back to the House of Representatives. Each amendment will trigger a 30-hour debate period, which may delay the process.

If Democrats choose to prolong these debates, the government may not be able to reopen until Wednesday or Thursday. However, if they expedite the process of ending the government shutdown and complete it tonight, the US government could reopen tomorrow night. Any delay means that the risk of a shutdown has not been completely eliminated.

Therefore, the entire process of the government "opening up" is expected to take several days to a week. For crypto, this may be the last "get-on zone" before a mini bull market arrives.