Bitcoin Drops, Then Rebounds After U.S. Funding Bill Passes

• House passes $1.2 trillion funding package with a 217-214 vote, ending the shutdown.
• Bitcoin dropped to $73,000 during uncertainty, triggering $30M DeFi liquidations.
• Large holders dumped 50,181 BTC in two weeks while retail accumulated coins.

The U.S. House of Representatives passed a $1.2T government funding package on Tuesday by a 217-214 vote, ending a partial shutdown that threatened federal operations. The legislation provides funding for most government departments through the end of the fiscal year, with lawmakers negotiating additional Department of Homeland Security funding over the next week and a half. President Donald Trump’s signature will formally reopen shuttered government agencies.

The narrow passage temporarily halted a sharp drop in cryptocurrency prices that saw Bitcoin fall to $73,000. The drop occurred during heightened uncertainty about whether the funding bill would secure sufficient votes for approval. Decentralized finance protocols recorded $30 million in total liquidations as Bitcoin reached its session low.

Synchronized Market Decline During Political Uncertainty

Bitcoin, the S&P 500, and gold all moved lower in tandem during the morning hours as lawmakers debated the funding bill. This is a “risk-off” move, where investors move out of volatile markets until the outcome of political and economic events is known. This is not an indication that the technology or adoption rate of Bitcoin is impacted by the funding bill, but rather a sign that global investors are managing risk exposure across markets simultaneously.

The gold market is also reacting differently. Gold is normally considered a safe-haven asset during times of stress, but it also declined in tandem with stocks and cryptocurrency during the funding bill debate. This is because investors will sometimes sell gold to raise cash or rebalance portfolios during times of rapid market stress, leading to a temporary decline before stabilizing.

Markets rallied immediately after the House vote as the threat of a shutdown receded. The market action shows relief rather than euphoria, as investors no longer have to worry about worst-case outcomes. Bitcoin and the S&P 500 both rallied, while gold erased some of its losses.

Wallet Distribution Reveals Bearish Positioning

Santiment data shows wallets holding 10-10,000 BTC have sold 50,181 coins over the past two weeks. Simultaneously, retail participants holding less than 0.01 BTC have been accumulating rapidly. This distribution pattern is the opposite of the combination that generally precedes Bitcoin and cryptocurrency market capitalization growth.

The divergence between large holder behavior and retail accumulation suggests that key stakeholders lack confidence in near-term price appreciation despite the recent resolution of political uncertainty. Whether this distribution pattern reverses following the passage of the funding bill will determine whether more constructive market conditions can develop.

Related: Jim Cramer Urges Saylor to Buy Bitcoin and Stop Price Drop