Key Insights
- Polymarket traders priced a 77% probability of a U.S. government shutdown before Jan. 31.
- Shutdown odds jumped sharply after Senate Democrats rejected advancing the DHS funding bill.
- Political deadlock added uncertainty to the CLARITY Act’s legislative timeline in Congress.
Polymarket traders sharply raised bets on another U.S. government shutdown before Jan. 31.
The prediction market priced shutdown odds at 77% on Saturday, up 67% in 24 hours, according to Polymarket data.
The move reflected rising political risk in Washington as lawmakers clashed over federal funding.
Markets reacted after Senate Democrats signaled opposition to advancing an appropriations package tied to homeland security funding.
Polymarket Shutdown Odds Spike After Senate Standoff
The odds spike followed comments from Senate Majority Leader Chuck Schumer late Friday.
Schumer said Senate Democrats would not “provide the votes to proceed” if the bill included funding for the Department of Homeland Security.
The statement immediately shifted sentiment on Polymarket, where traders rapidly repriced shutdown risk.
Political commentator Collin Rugg highlighted the surge in an X post on Saturday, pointing to the timing of Schumer’s remarks.
Schumer later expanded his position, criticizing the Department of Homeland Security funding language.
He said the bill failed to rein in Immigration and Customs Enforcement abuses and confirmed he would vote against it.
“What’s happening in Minnesota is appalling—and unacceptable in any American city,” Schumer said in a statement.
His comments followed reports that U.S. federal agents shot and killed a 37-year-old man in Minneapolis earlier that day.
While unrelated legislatively, the incident added pressure to an already fragile funding debate.
The combination intensified concerns that negotiations could stall ahead of the Jan. 31 deadline.
President Donald Trump added further uncertainty during a Fox Business interview on Thursday.
Trump did not rule out another shutdown, blaming Democratic resistance.
“I think we have a problem,” Trump said.
“I think we’re probably going to end up in another Democrat shutdown.”
His remarks reinforced trader expectations that negotiations could break down again.
Polymarket volume exceeded $5.1 million, showing rising conviction behind the shutdown scenario.
The United States last endured a record 43-day shutdown between October and November.
That episode disrupted regulatory agencies and delayed several legislative initiatives.
CLARITY Act Timeline Clouded as Polymarket Signals Risk
The renewed shutdown risk also clouded the outlook for the CLARITY Act, a major crypto-market-structure bill.
Lawmakers introduced the bill to clarify regulatory oversight for digital assets.
Previous delays to the CLARITY Act coincided with the 43-day government shutdown.
Another funding lapse could push its timeline further into uncertainty.
Industry reaction to the bill already turned mixed earlier this month.
Coinbase Chief Executive Officer Brian Armstrong withdrew support, citing concerns about the draft’s direction.
“This version would be materially worse than the current status quo,” Armstrong said on Jan. 15.
“We’d rather have no bill than a bad bill.”
Other executives privately echoed similar reservations, according to people familiar with the discussions.
The pullback weakened industry momentum behind advancing the legislation quickly.
Stablecoin Debate Adds Friction to Negotiations
Galaxy Digital head of research Alex Thorn said unresolved issues continue to complicate progress.
In a Thursday report, Thorn pointed to disagreements over stablecoin yield provisions.
U.S. banking groups argued that yield-bearing stablecoins could undermine traditional banks.
Those concerns remained central to negotiations surrounding the CLARITY Act’s framework.
“There aren’t yet any indications that the two sides have identified a compromise,” Thorn said.
He added that talks remained stalled despite mounting political pressure.
Thorn said lawmakers could revisit the bill in four to six weeks if funding issues stabilized.
He suggested the delay could give negotiators time to resolve disagreements over stablecoin rewards.
Still, Thorn questioned whether negotiations would advance during a potential shutdown window.
“The big question is whether gridlock clears in time for a bipartisan markup,” he said.
Markets Brace for Jan. 31 Deadline
With less than two weeks before the funding deadline, traders continued adjusting positions.
Polymarket’s steep probability shift suggested expectations of political failure, not compromise.
The market move reflected broader uncertainty across policy-sensitive sectors.
Crypto legislation, defense funding, and border security all remained entangled in negotiations.
If lawmakers fail to reach an agreement, federal agencies would again face partial closures.
That outcome would likely stall regulatory work tied to digital asset oversight.
For now, prediction markets offered the clearest signal of sentiment.
At 77% odds, traders positioned for disruption rather than resolution as Jan. 31 approached.