Bitcoin fell to nearly $87,000 as fears of a U.S. government shutdown impacted the crypto market. The cryptocurrency dropped 1.93% in 24 hours, with Ethereum also seeing a decline. Analysts attribute this downturn to a broader risk-off sentiment driven by uncertainty in U.S. government funding and political gridlock. Rick Maeda from Presto Research noted that the pressure on risk assets, including crypto, is linked to rising concerns about potential funding disruptions. The likelihood of a government shutdown is currently pegged at 75% on Polymarket, fueled by stalled negotiations over spending limits. Legislative friction in Congress, particularly among Democrats regarding a Department of Homeland Security funding bill, has intensified these worries. This political climate has raised risk premiums across various markets, affecting investor sentiment deeply. Institutional demand for Bitcoin appears cautious, as indicated by significant net outflows from U.S. spot Bitcoin exchange-traded funds, totaling about $1.33 billion last week. While some targeted buying in stocks related to crypto, like ARK’s purchases of Coinbase shares, shows ongoing interest, Maeda suggests this activity may not reflect broader institutional sentiment. Analysts are keeping an eye on upcoming macroeconomic indicators, such as the Federal Reserve's interest rate decision and U.S. producer price index data, which could further influence market conditions.