U.S. government shutdown ends: Poor data shockwave, may be the last enter a position zone before the bull run.

Written by: Oliver, Mars Finance

A widely circulated data chart reveals an astonishing historical pattern regarding the impact of the U.S. government shutdown on the market.

Data shows that looking back at the three major shutdowns in 1995, 2013, and 2018-2019, the average performance of the S&P 500 index during the shutdown was a slight increase of 1.2%. But the real “surprise” comes after: in the 3 months following the end of the shutdown, the S&P 500 averaged a significant increase of 8.5%.

source: @BunnyTalks_

History seems to be telling us through data: the end of the standstill is the true starting gun for a bull market.

And this historical law seems to perfectly predict everything that is about to happen.

So, what will be the specific mechanism driving the 8.5% increase after the end of the “longest shutdown in history” in 2025? The answer is: an unprecedented trillion-dollar “liquidity flood” triggered by TGA “opening the door”.

As for why we feel so painful this time (BTC broke below 99,000)? This precisely proves that the “destructive mechanism” of 2025 is unprecedented. This time, the “trillion-dollar black hole” created by the Treasury's TGA account has caused a structural “dollar shortage.”

However, this not only did not overturn historical laws, but instead made the “flood release” rebound after the standstill more intense and certain.

However, before the “flood” of “flood discharge” arrives, another “black swan” - or rather, a large batch of “poor quality data” - will hit the market first.

40 Days of “Financial Black Hole”: The Real Culprit Behind the Market Crash

For those who personally experienced the crash in early November, this standstill is certainly not easy.

In the first week of November, Bitcoin not only failed to hold the $100,000 mark but even briefly fell below $99,000, setting a new six-month low.

What is the market panicking about?

It is not a black swan, nor a narrative collapse, but a mechanical “dollar shortage” created by the U.S. Treasury.

The name of this “pump” is called TGA (Treasury General Account).

TGA, which can be understood as the “central check account” established by the U.S. government at the Federal Reserve. All federal revenues (taxes, bond issuance) are deposited here, and all government expenditures (civil servant salaries, defense spending) are allocated from here.

Under normal circumstances, TGA is a “transit station” for collecting and spending money, maintaining dynamic balance.

But the “government shutdown” broke this cycle. With Congress failing to approve the budget, most government departments closed, and the Treasury Department was “unable to spend as planned.” The TGA became a financial black hole that only takes in but does not give out.

The data is astonishing. Since the halt began on October 1, the TGA balance has surged from about $300 billion to over $1 trillion by the end of October.

In just 40 days, over 700 billion dollars in cash has been forcibly withdrawn from the market and locked in the Federal Reserve's vault.

A market short of money will “die.”

This $700 billion liquidity vacuum is the last straw that could crush the crypto market. The $403 million net outflow from BlackRock's IBIT during the week of October 28 to November 3 is not because institutions are losing confidence in Bitcoin, but because their “dollars” have become more expensive, forcing them to sell off high-risk assets to obtain cash.

What we see is that LTHs (Long-Term Holders) have net sold 405,000 BTC in 30 days, cashing out over 4.2 billion dollars, which is not a collapse of faith, but rather “the landlord's family has no surplus grain either.”

October 31: The Shock Alarm of the “Dollar Shortage”

If TGA is a “trillion-dollar black hole,” then October 31 is the day this black hole nearly caused the financial system to go into “shock.”

On this day, the “capillaries” of the American financial system emitted two clear warnings, both reaching the highest levels since the pandemic crisis in March 2020.

Alert 1: Interbank “borrowing costs” are out of control.

There is a key interest rate that measures the true cost of “borrowing money overnight” between banks. On October 31, this rate soared to 4.22%.

The terrifying aspect of this number is that the “upper limit” of the policy interest rate set by the Federal Reserve is 4.00%. This means that due to the severe “dollar shortage”, banks would rather pay “penalties” to borrow money. The actual cost in the market has spiraled out of control, detached from the central bank's grasp.

Alarm two: Banks collectively rush to the Federal Reserve's “pawn shop.”

When banks cannot borrow money in the market (including “penalty interest”), they have only one last choice: to pledge high-grade bonds to the Federal Reserve in exchange for “emergency” cash.

On October 31, the usage of this “emergency window” exploded to $50.35 billion.

The combination of these two data points translates to: By the end of October, the banking system is really “short of money”. They first attempted (Alarm 1) to “bleed” each other at any cost, and when the “bleeding” failed (Alarm 2), they began to collectively rush to the Federal Reserve's “emergency room.”

All the blockages in the “downstream pipeline” originate from the “upstream reservoir” of TGA, which has only taken in and not released anything in the past 40 days.

Data Black Hole: The Federal Reserve's “Blindness” and the Market's “Panic”

Now, the “root of the problem” is going to be pulled out. TGA is about to “open the floodgates.”

In theory, the market should make a V-shaped reversal. But the problem is that the government has been shut down for 40 days, which affects not only the cash flow of the TGA but also the operations of key data departments such as the Bureau of Labor Statistics (BLS) in the United States.

This is the first “big test” that the market is about to face, and it is also the source of the “golden pit.”

Morgan Stanley economists have warned that the employment data for September (set to be released as early as this Friday) will be “patchy,” and that the CPI, PPI, and PCE for October— the inflation indicators most favored by the Federal Reserve— may not even be released at all.

Due to the data collectors being suspended, the inflation data for October “was not collected at all.”

This created a perfect “data black hole” before the Federal Reserve's interest rate meeting in December.

Federal Reserve Chairman Powell has consistently emphasized that his decisions are “data-driven”. However, now he has “no data to rely on”.

This will bring great uncertainty to the market in the short term. What the market fears the most is not “bearish” but “unpredictability”. When elite traders on Wall Street find themselves unable to predict the next move of the Federal Reserve, their first reaction is to sell off risk assets until the uncertainty is resolved.

We are likely to witness an extremely unusual scenario: the market first cheers and rises for the positive news of “government reopening” and “TGA drainage”; then (perhaps this Friday), when that “poor quality” September employment report is released, the market suddenly awakens, realizing that the Federal Reserve has become “blind,” leading to a panic sell-off.

Trillions of “flooding” encounter “data black holes” = the last “golden pit”?

This is precisely the most ingenious point of contention in the current market.

On one hand, we have a certain, long-term huge benefit: the $1 trillion “flooding” of TGA.

More importantly, according to our in-depth research, the “sponge” used to absorb this flood — RRP (reverse repurchase agreement) — has seen its balance drop from $2.2 trillion to less than $80 billion.

This means that the 10 trillion liquidity released by TGA will flow directly into bank reserves without any buffer and will surge into risk assets. This is almost a certainty of “massive monetary easing.”

On the other hand, we have a sudden, short-term huge uncertainty: the shockwave of the “data black hole.”

What will happen when these two events overlap?

A perfect “golden pit” created by “uncertainty”.

This may be the “last 'boarding zone' before the arrival of the small bull market” mentioned in the materials.

Astute traders are waiting for this “dislocation.” They know that the “great liquidity” will eventually come, but they also understand that the market will first be spooked by “poor data.”

If the market experiences a sharp correction this Friday or early next week due to an “uninterpretable” employment report or “missing” CPI expectations—such as dipping again to the liquidation zone of $99,000 or even lower—it is likely not the beginning of a new bear market, but rather the last “sell-off to accumulate” before the trillion-dollar liquidity “flood” arrives.

The Real “Storm”: When “New Water” Meets “New Channel”

What makes short sellers even more desperate is that once the market has “digested” this “data black hole”—perhaps the Federal Reserve will be “forced to be dovish” for the sake of “financial stability” (i.e., a surge of 50 billion in SRF)—the “new funds” from TGA will encounter a “new channel” after regulatory work resumes.

The government is reopening, and the SEC will also resume work.

Analysts at Bitunix are concerned that “accelerated regulatory scrutiny” may bring negative impacts, but the mainstream expectations in the market are clearly more optimistic.

Because in September, the SEC approved the “Universal Listing Standards”, which is seen as greatly “accelerating” the ETF approval process. What the market is waiting for is no longer BTC or ETH, but a series of compliant products such as SOL, XRP, ADA, and DOT that will bring a massive influx of new funds to the market.

Now, please put all the puzzles together:

Faucet (TGA): Soon to release $10 trillion in liquidity.

Reservoir (RRP): It is nearly depleted and unable to absorb floodwaters, liquidity will directly overflow.

Water Channel (SEC): Resuming work soon, preparing to approve a new batch of “altcoin ETFs.”

This is the true meaning of “government opening the door.” The short-term “data black hole” it brings may create a panic-induced pullback, but this is likely the last “boarding zone” before the trillion-dollar liquidity feast arrives.

After all, when TGA's “new water” meets SEC-approved “new channel,” what we will be discussing is no longer “whether there will be a recovery,” but rather “when the next altcoin season will explode.”