ETH ($3,958) led a decline in major cryptocurrencies Thursday during Asian trading hours, as investor concern over a potential U.S. government shutdown intensified.

The odds of a shutdown reached record highs on the decentralized prediction platform Polymarket, with “Yes” shares for the contract “U.S. government shutdown in 2025?” climbing to 77%, the highest since its January launch. Traders are effectively pricing a 77% chance that the U.S. Office of Personnel Management will announce a shutdown by December 31, while the likelihood of a shutdown by Oct. 1 stood at 63%.

Media reports indicate the White House is preparing for large-scale job cuts in the event of a shutdown. On Wednesday, the Office of Management and Budget issued guidance asking agencies to develop plans for staff reductions and furloughs if Congress fails to pass a spending measure next week.

The government is projected to run out of funds by the end of September. To avoid a shutdown, Congress must either approve a short-term funding measure (continuing resolution) or pass the 12 full-year funding bills, which are unlikely to be finalized before the deadline. Achieving the 60-vote threshold typically requires bipartisan support.

Cryptocurrencies Under Pressure

• Ether fell over 3%, testing the $4,000 level for the first time since August 8
• Bitcoin (BTC $109,362) slipped more than 1% below $112,000
• Other major tokens—including XRP ($2.7469), SOL ($196.78), and DOGE ($0.2277)—declined 2.6%–3%, with Solana flirting with a break below $200

The CoinDesk 20 Index fell 2% to 3,940 points, while S&P 500 and Nasdaq futures traded flat to slightly positive.

Investor caution appears linked to the looming shutdown risk, though sentiment was also influenced by comments from San Francisco Fed President Mary Daly, who reiterated support for further rate cuts but emphasized a data-dependent approach.

The Fed cut rates by 25 basis points on Sept. 17 and hinted at two more cuts by year-end, though policymakers, including Chairman Jerome Powell, have signaled a cautious stance. Seven Fed officials, including New York Fed’s John Williams, are scheduled to speak Thursday, while markets await Friday’s PCE inflation data, the Fed’s preferred measure of price pressure.

Market Outlook

“If inflation pressures appear contained, markets may interpret this as room for further Fed cuts, providing liquidity tailwinds into Q4. That could be the catalyst for BTC to attempt a long-anticipated breakout,” noted the QCP Capital market insights team in Singapore.