Bitcoin News Today: Political Gridlock Triggers Risk-Off Exodus, Testing Crypto's Institutional Resilience

Bitcoin, Ethereum, Dogecoin, and XRP declined amid heightened uncertainty surrounding the U.S. government shutdown, with investors reducing risk exposure as political gridlock persisted. As of October 6, 2025, Bitcoin (BTC) traded at $121,833.80, down 0.55% from a recent record high of $126,198.07, while Ethereum (ETH) fell 1.90% to $4,389.97 after dipping below $4,500 intraday. XRP and Dogecoin also retreated by 1.40% and 1.05%, respectively . The broader crypto market capitalization stood at $4.20 trillion, reflecting a modest 0.62% increase over 24 hours despite the sell-off .

The government shutdown, now in its ninth day, has intensified market jitters, with no clear resolution in sight between Republicans and Democrats. This uncertainty has driven a "risk-off" sentiment, reducing appetite for high-volatility assets. On-chain analytics firm CryptoQuant highlighted that Bitcoin's short-term holders have a weighted average cost basis of $112,200, a critical support level that, if breached, could trigger panic selling. "To prevent panic selling from STHs, it is crucial for the ongoing consolidation to hold above the $112k line in the short term," CryptoQuant noted .

Trading volumes surged by 13% to $71 billion in the last 24 hours, with spot ETFs tracking Bitcoin experiencing a net outflow of $57 million . Meanwhile, crypto liquidations exceeded $670 million, with over $500 million in long positions wiped out, according to Coinglass data. Bitcoin's open interest rose 0.51% in the same period, indicating new short positions being opened amid the price decline . The Crypto Fear & Greed Index, which tracks market sentiment, showed weakening "greed" levels, reflecting growing caution among traders .

Analysts observed divergent trajectories for Ethereum and altcoins. Ethereum's Wyckoff accumulation phase, a period of institutional buying during downturns, is in its "final phase," according to ZYN, a prominent crypto analyst. A weekly close above $4,750 could catalyze a new rally, with a target of $8,000 by year-end and $10,000 at the cycle peak . However, the broader altcoin market remains vulnerable, with Solana (SOL) and other assets facing sharper declines due to regulatory uncertainties and market volatility .

Institutional demand for Bitcoin remains robust, with spot ETFs recording $3.5 billion in weekly inflows as of October 6 . This contrasts with the temporary outflows observed in recent days, underscoring the tug-of-war between short-term volatility and long-term bullish sentiment. The U.S. dollar's softness and expectations of a dovish Federal Reserve policy further bolster crypto's appeal as a hedge against traditional market risks .

The shutdown's impact on the crypto market mirrors historical patterns, such as the 2013 gridlock that saw Bitcoin nearly double amid similar fiscal uncertainty. However, the current environment is marked by higher institutional participation and regulatory complexity, which amplify both the potential for safe-haven demand and the risks of sudden corrections. Analysts caution that prolonged political dysfunction could delay critical regulatory developments, including crypto ETF approvals and the CLARITY Act, further complicating market dynamics .

As the market navigates this volatile period, key technical levels and macroeconomic signals will dictate the near-term outlook. For Bitcoin, maintaining support above $112,200 is critical to avoiding deeper corrections. Ethereum's path to $4,750 and the broader market's resilience against liquidation risks will be pivotal indicators.