DHS conflict raises the forecast of a US government shutdown, cryptocurrency market has not yet responded

The Polymarket cryptocurrency prediction platform has just priced an 85% likelihood of a US government shutdown in the upcoming period. There is still time to prevent it, but signs indicate political instability is increasing. The most notable point: most of the market has not yet priced in this risk. As Congressional financial decisions update, many cryptocurrency investors will find themselves missing out on an opportunity or a crisis.

What is DHS and why has it become a hot topic?

DHS, short for the Department of Homeland Security, is the federal agency responsible for border security, counter-terrorism, and disaster management. In the annual federal budget, funding for DHS is one of the long-standing points of contention between parties. Recently, after the Minneapolis shooting related to border patrol, Democratic members used it as a tool to block DHS funding bills on the Senate floor. When DHS funding is delayed, a government shutdown is not just an administrative issue—it’s a real economic shock.

What happens during a government shutdown: Lessons from 2025

To understand the current risk, just look back at the recent fiscal crisis. In 2025, a 43-day government shutdown left significant economic scars: GDP contracted by 2.8%, total losses of $34 billion, and 670,000 federal employees sent home unpaid. This isn’t just politics—it’s real economic damage. The economy isn’t just paused; it’s paralyzed by uncertainty.

Chain reaction in the economy: Why this time could be different

A prolonged shutdown doesn’t always have symmetrical effects. Federal salaries are delayed. government contracts are halted. agency approvals are paused. Economic data is delayed. All these create waves of uncertainty spreading through the private sector. Consumers cut back on spending. Businesses delay investments. Credit markets tighten.

How will the markets react?

History shows a predictable pattern. Government bonds move first as investors seek safety. Stocks react afterward, but not always downward—some sectors benefit from monetary easing. But cryptocurrencies move independently. Bitcoin and risky assets often surge during moments of high political instability. Stock markets need time to adjust; DeFi and crypto markets react within hours. The issue is most current crypto investors are not monitoring this DHS risk. When bills are blocked, and headlines start warning of an upcoming shutdown, the market will be caught off guard. And by then, it will be too late to price it reasonably.