Bitcoin dipped to $72.8K during U.S. shutdown fears, then rebounded sharply after lawmakers passed a funding bill.

Bitcoin (BTC) slid to around $72,800 yesterday as U.S. lawmakers debated a stopgap funding package before rebounding once the House passed the bill on February 4, 2026, easing fears of a government shutdown.

The quick turnaround showed how closely crypto prices still track U.S. political risk, even when no blockchain-specific news is involved.

Shutdown Fears Ripple Through Crypto

According to a February 4 post by on-chain analytics firm Santiment, the sell-off unfolded during U.S. trading hours while headlines pointed to a tight vote in the House. As uncertainty built, BTC quickly fell, triggering about $30 million in DeFi liquidations and mirroring a synchronized drop in the S&P 500 and even gold, an asset typically viewed as a safe haven.

This correlation indicates traders were reducing exposure to volatile assets broadly due to the political standoff, not crypto-specific news.

The concern centered on whether Congress would approve a roughly $1.2 trillion funding package to keep most federal agencies running through September 30. Failure would have led to a partial shutdown, delaying economic data and adding stress to an already cautious market.

The tense vote saw Republican divisions, with one representative voting against the bill due to foreign aid provisions.

However, the bill ultimately passed, averting a shutdown and causing markets to respond with immediate relief. Bitcoin bounced from its lows, climbing over 5% within hours, and the S&P 500 also recovered. According to Santiment, the speedy recovery showed that fears of political dysfunction, rather than a fundamental reevaluation of Bitcoin’s value, were behind the earlier sell-off.

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Broader Pressures on Bitcoin’s Price

While the funding bill news provided a clear short-term catalyst, Bitcoin is still facing broader headwinds. Per data from CoinGecko, the asset is down nearly 14% in the last seven days and 17% for the month.

A recently published analysis from Galaxy Digital pointed to deteriorating on-chain metrics, with research head Alex Thorn noting that 46% of Bitcoin’s circulating supply is now “underwater,” meaning it was last moved at higher prices, which can increase selling pressure. He also pointed out that there was a lack of significant accumulation by large holders.

Furthermore, on February 3, reports that Iran was seeking to shift the format of nuclear talks with the U.S. contributed to another leg down in Bitcoin’s price, pushing it below $75,000 and burning at least $20 million worth of derivative positions.

Additionally, some analysts like Doctor Profit have revised their downside targets, saying the cycle bottom could hit a range between $44,000 and $54,000. However, the key question is whether the resolution of the immediate U.S. political risk will be enough to reverse these negative technical and on-chain trends, or if BTC is still vulnerable to a deeper test of support.

The price of Ethereum’s native token, Ether (ETH), risks sliding below $2,000 in February as a classic bearish setup plays out.

Key takeaways:

• ETH breakdown keeps $1,665 downside target in focus.

• MVRV bands also point to price sliding toward $1,725 or lower before a potential bottom.

ETH risks declining 25% in February

As of Wednesday, ETH had entered the breakdown stage of its prevailing inverse-cup-and-handle (IC&H) pattern. This could extend a downtrend that has already erased about 60% from its August 2025 peak.

An IC&H pattern forms when price forms a rounded top and then drifts higher in a small recovery channel. It typically resolves when the price breaks below the neckline support, often falling by as much as the cup’s maximum height.

Ether broke below the inverse cup-and-handle neckline near $2,960 in January. It later rebounded to retest that level as resistance, a common post-breakdown move, only to resume its decline.

ETH’s rebound also stalled below the 20-day (green) and 50-day (red) EMAs, which acted as overhead resistance.

These confluence indicators raised ETH’s odds of declining toward the IC&H breakdown target at around $1,665, down 25%, in February or by early March.

Historically, the inverse cup-and-handle hits its projected downside target with an 82% success rate, according to a study by Chartswatcher.

From a macro perspective, Ethereum’s downside risk is increasing as traders cut back on crypto bets, worried the market could slip into a broader 2026 downturn similar to past “four-year cycle” pullbacks.

Fears of an “AI bubble” popping are also forcing traders to avoid riskier bets such as crypto.

Ethereum’s MVRV bands hint at $1,725 target

Ethereum’s technical downside target sat just below the lowest boundary of its MVRV extreme deviation pricing bands, currently at $1,725.

These bands are onchain price zones that show when ETH is trading below or above the average price at which traders last moved their coins.

Historically, ETH price plunged near or even below the lowest MVRV band before bottoming out.

That includes the April 2025 bounce, when the ETH price rose 90% a month after testing the lowest MVRV deviation band around $1,390. A similar rebound occurred in June 2018.

Related: ETH funding rate turns negative, but US macro conditions mute buy signal

Therefore, Ether may decline toward $1,725 or below in February, which lines up with the IC&H downside target.