Polymarket Odds Hit 77% for Gov Shutdown; CLARITY Act on Life Support
Polymarket traders price a 77% chance of a US government shutdown by Jan 31 as Schumer blocks DHS funding, threatening to derail the CLARITY Act.
January 25, 2026. Prediction markets just signaled a code red for US legislative stability. Polymarket traders are now pricing in a 77% probability of a federal government shutdown by January 31, a massive repricing from single digits just 48 hours ago. The sudden volatility stems from a breaking standoff between Senate Democrats and the GOP over Department of Homeland Security (DHS) funding, a conflict that threatens to torch the timeline for the industry’s flagship regulatory bill, the CLARITY Act.
The Prediction Market Signal
The specific contract, “Will there be another US government shutdown by January 31?,” witnessed a violent vertical move, surging 67 points in 24 hours on $2 million in volume. Traders are aggressively hedging against a repeat of the 43-day shutdown seen in late 2025. This isn’t retail speculation; the $74.9k in fresh capital deployed today suggests institutional conviction that the Senate appropriations deal has collapsed.
The Political Trigger
The catalyst is political, not fiscal. Senate Majority Leader Chuck Schumer confirmed today that Democrats will block any appropriations bill containing DHS funding, citing the fatal shooting of a civilian by federal agents in Minneapolis this weekend. “Senate Democrats will not provide the votes to proceed,” Schumer stated, effectively freezing the legislative gear train five days before the deadline.
“What’s happening in Minnesota is appalling, and unacceptable in any American city.” , Chuck Schumer
Collateral Damage: H.R. 3633
The immediate casualty is the Digital Asset Market Clarity Act (H.R. 3633). The bill, which passed the House in 2025, was slated for a critical Senate Banking Committee markup this week. A shutdown freezes committee schedules indefinitely, pushing the CLARITY Act into a legislative limbo that could last months. This delay might be a blessing in disguise for some; Coinbase CEO Brian Armstrong publicly withdrew support for the current draft on January 15, warning the revisions made it “materially worse than the status quo.”
Market Outlook
With the shutdown odds nearing certainty, traders are bracing for volatility. A funding lapse halts the SEC’s rulemaking processes but leaves enforcement divisions active, the worst-case scenario for crypto compliance teams. The market has spoken: the deal is dead.
