Will Bitcoin plunge straight into a liquidity storm once the federal government shutdown ends?

The federal government shutdown is nearly over, but as funding pressures mount across markets, is Bitcoin headed for its toughest liquidity test yet?

Federal agency shutdown relief triggers risk-on rally

The United States may finally be nearing the end of a record federal shutdown. On November 10, the Senate approved a bipartisan funding bill to reopen the government by the end of January by a vote of 60-40, sending it to the House for final consideration.

Lawmakers were called back to Washington to secure a deal, raising the possibility of a break from weeks of fiscal impasse.

Financial markets reacted positively, especially in tech stocks. The Nasdaq rose about 2.3%, the S&P 500 rose about 1.5% and the Dow rose about 0.8%.

U.S. Treasury yields have edged up to a range of 4.11% to 4.13% as bond prices have fallen, consistent with a “risk-on” environment as capital moves toward stocks and higher-yielding assets.

Global stock markets remained firm on November 11, although US futures fell slightly as traders reassessed the previous day’s bullish market.

The prolonged shutdown froze the release of key government data, including reports from the Department of Labor, the Census Bureau, and the Bureau of Economic Analysis.

The monthly jobs report was canceled for the second month in a row, and officials warned that the consumer price index could face similar delays. Contingency plans for key agencies also confirmed widespread interruptions in data collection, with the exception of some limited CPI updates.

Once the government reopens, investors will once again have access to economic indicators that guide expectations for growth, inflation and monetary policy.

These indicators directly impact global risk appetite, often driving flows into alternative assets such as Bitcoin (BTC), and sentiment tends to track changes in macro liquidity.

Cryptocurrencies join broader market recovery

The virtual currency market has moved in tandem with the stock market. After falling to nearly $99,000 over the weekend, Bitcoin rose to a seven-day high of about $106,500 on November 10th. As of November 11, the stock is trading around $103,500, a modest decline after a strong rebound.

BTC price chart |Source: crypto.news

Ethereum (ETH) followed a similar risk-on trend, rising from a weekend low around $3,100 to $3,650 before stabilizing around $3,460.

Hopes for government reopening and short-term liquidity support lifted sentiment across digital assets. An accumulation of new companies led by Strategy, one of Bitcoin’s largest institutional holders, added further strength.

However, the US Spot Bitcoin ETF did not support the rally. According to data from CoinShares, a total of approximately $1.17 billion was reported to have been outflowed for the second consecutive week.

The difference between ETF redemptions and price increases indicates that the rebound likely stemmed from direct spot purchases and derivative repositioning rather than inflows.

In previous political conflicts, traders typically put aside cryptocurrencies and moved to cash or U.S. Treasuries. This time, signs of reopening have reduced headline risk and given investors confidence to rebuild growth exposure across technology and digital assets.

Gold rose towards $4,100 an ounce alongside Bitcoin, showing investors are comfortable holding both hedging assets and liquidity-sensitive instruments.

For now, Bitcoin’s rally shows investors are moving out of defensive mode and back into assets that benefit from growth and liquidity.

Reopening will restore the macro driver for encryption.

The next few days will see the release of U.S. economic data that has not been released for weeks. October’s consumer price index will be the first major test of how inflation is faring after the blackout.

Stronger inflation in print and adhesive services could cause bond yields to rise quickly and weaken the market’s risk appetite. After the Nov. 10 stock rally, the 10-year Treasury yield is already near 4.12%.

Rising yields make borrowing costs higher, and if they continue to rise, the overall valuation of growth assets could be compressed.

Government borrowing plans are the second pressure point. A Treasury report in early November details coupon and buyback plans for the next quarter, providing the first look at how bond supply will develop once bidding resumes.

Even small changes in how the Treasury finances its debt, whether by relying on short-term bills or adjusting long-term issuance, can shift the yield curve and affect global liquidity and the cost of leverage across markets, including cryptocurrencies, where funding rates often track the strength of the dollar.

Expectations regarding monetary policy will bring new developments. As of Nov. 11, CME’s FedWatch tool shows the market still expects a rate cut toward the end of 2025, but confidence in that path remains subdued.

Strong CPI and solid labor data could delay these expectations and keep real yields strong. Higher real yields make holding cash and Treasuries more attractive compared to more volatile assets.

Each of these levers will be reset once Washington returns to normal operations. If inflation subsides and bond supply is absorbed smoothly, markets could continue to ease and support both stocks and cryptocurrencies. If inflation persists or bid demand weakens, yields could rise again, drawing liquidity from risk assets.

Bitcoin waits to break above $110,000

A growing concern in the market is the increase in the U.S. Treasury’s general account, which now exceeds $900 billion for the first time since 2021, according to the Covisi Letter.

The account, which serves as the Federal Reserve’s main government cash reserve, has expanded by about $666 billion since June. As this balance increases, it depletes liquidity from the banking system and increases the cost of short-term borrowing in the repo market.

Currently, repurchase transactions amount to about $3 trillion per day, about three times the level of three years ago. If these pressures persist, the Fed may need to intervene to maintain funding stability and expand its balance sheet again.

If current trends continue, liquidity could become even tighter and volatility in interest rate-sensitive assets, including Bitcoin, could increase.

At the same time, the derivatives market does not show any real benefits from speculative activities. Open interest in Bitcoin futures remains subdued following the October leverage reset, with minimal new activity across major exchanges, according to Glassnode data released today.

The slowdown signals a broader cooling in sentiment, with traders seen as reluctant to rebuild exposure until there is more clarity on policy direction and liquidity support.

Historically, periods of low open interest amid macro uncertainty often precede a healthier market recovery as excess leverage is removed from the system.

Meanwhile, analysts tracking Bitcoin’s price see $110,000 as the next big test. On a chart shared by the trading desk, BTC is below its 200-day moving average and close to a long-term resistance level that previously served as support.

A clear break above this range could confirm new momentum, but repeated failures there could lead to another setback.

For now, confidence is slowly returning, but conviction is still fragile. Until liquidity expands or real demand strengthens, Bitcoin’s stability will depend on stable funding conditions rather than sentiment alone. Trade wisely and never invest more than you can afford to lose.