The spike comes days after US President Donald Trump suggested that another shutdown remains likely, stating that the country could “end up in another Democrat shutdown.” The timing has reinforced market expectations that political gridlock is once again becoming a near-term risk.

Budget Standoff Clouds Regulatory Timelines

The renewed shutdown threat is not limited to fiscal politics. It also casts uncertainty over the CLARITY Act, a major crypto bill designed to bring regulatory clarity to digital assets. Previous delays to the bill were widely linked to the record 43-day US government shutdown in October and November, making the current risk particularly sensitive for the crypto industry.

Senate Tensions Intensify

Political pressure increased after Senate Majority Leader Chuck Schumer said Democrats would not support advancing an appropriations bill that includes funding for the Department of Homeland Security. The statement underscored how fragile negotiations remain, with key funding issues still unresolved.

US officials have not ruled out a shutdown scenario, adding to the sense that negotiations could break down rather than move forward quickly.

Crypto Industry Support Remains Fragile

The uncertainty has already affected sentiment around the CLARITY Act. Coinbase CEO Brian Armstrong and several industry executives have withdrawn support, arguing that the current draft could be worse than maintaining the status quo.

Galaxy Digital research head Alex Thorn has also flagged unresolved disagreements, particularly around stablecoin yield structures. According to Thorn, these issues remain one of the most divisive points, with no clear compromise yet in sight.

As Polymarket odds continue to price in a shutdown, the risk is no longer theoretical. Political deadlock now threatens to delay both fiscal decisions and crypto regulation timelines, keeping markets on edge heading into the final days of January.

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JPMorgan Updates US GDP Growth Forecast for 2025

JPMorgan has revised its 2025 US GDP growth forecast down from 1.9% to 1.6%. According to economist Michael Feroli, this update indicates that economic growth may be lower than expected. JPMorgan emphasized that the revision was necessary due to the increasing economic risks.

JPMorgan Economist Feroli Highlights Three Key Risks for the US Economy

Feroli identified three major risks threatening the US economy: political uncertainty, new tariffs that are slowing down consumer spending, and retaliatory tariffs from foreign countries negatively impacting exports. These factors collectively contribute to a slowdown in economic growth.

Feroli warned that with no clear resolution in sight, if these uncertainties continue, the US economy may take a long time to experience significant growth. “The current outlook suggests that we may need to wait a long time,” he said, cautioning that economic recovery may take longer than anticipated.

Revised Growth Forecast Signals Slowdown for the US Economy

JPMorgan’s downgrade in its growth forecast signals that the US economy may experience slower growth in 2025. Factors such as economic uncertainties, new tariffs, and trade barriers are expected to slow down economic growth, making this an important development for investors to watch closely.

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