Having been in this market for over a decade, I've seen many intense fluctuations, but this time the chain reaction triggered by the US government shutdown is quite interesting — it seems like a policy issue on the surface, but in reality, it illuminates both the market's structural problems and trading opportunities.

**Liquidity Drained Live**

This shutdown lasted 37 days, setting a record. The Treasury's TGA account acted like a pump, continuously siphoning money out of the market. In just 37 days, the account balance soared above $1 trillion, with the market being forcibly drained of over $140 billion in liquidity. This is more aggressive than a direct rate hike by the central bank because the money isn't flowing into other assets; it's being directly frozen in the Treasury.

The most striking data is here — the SOFR rate (the cost of bank borrowing) shot up to 4.22%, creating a spread with the policy rate that reached a new high since March 2020. Banks couldn't borrow from each other anymore and had to desperately sell assets for cash. The Federal Reserve's emergency financing tools were borrowed over $50 billion. During liquidity crunches, the first to suffer are always high-risk assets. High volatility assets like Bitcoin and Ethereum naturally became the first to fall.

**Institutional and Retail Reactions Differ Completely**

On the surface, the numbers look alarming — Bitcoin fell below $100,000, and Ethereum lost the $3,100 level — but the details are key. ETF net outflows have continued for five days straight, totaling nearly $2 billion, indicating that institutions are clearly fleeing. Retail investors, however, reacted differently — some are bottom-fishing, while others are watching cautiously, signaling a clear market split.