Bitcoin is off to a brilliant start in the first trading week of the new month. With a daily increase of 4.2 percent, the crypto reserve currency was trading at $28,283 at the time of writing. Striking: On Monday night, the digital gold conjured up a significant plus on the table within an hour. The background is the averted government shutdown in the USA. In the US Congress, the Democrats and Republicans struggled until the end to reach an agreement. Now she’s here and government employees do not have to go on compulsory vacation for the time being. President Biden signed the law shortly after it was agreed in Congress on Saturday.
However, the money will only continue to flow in the short term: the Stopgap plan, which is supported by both US parties, will only last until mid-November, after which there is a risk of an administrative break again.
What does the US shutdown have to do with Bitcoin?
The averting of a government shutdown in the USA is a positive signal to the markets. Finally, Congress allows the government to take on new debt; so the money keeps flowing. The reaction to risk assets like Bitcoin is correspondingly bullish.
Small investors had probably expected an opposite event and misjudged it, says BTC-ECHO market expert Stefan Lübeck.
In the run-up to a possible shutdown, small investors in particular are increasingly selling off their stock and crypto positions. This is where Big Money takes over. In reality, Q4 is the historically strongest quarter – institutional investors know this and are buying up the positions of retail investors
Actually, “the government shutdown is a non-event anyway,” Lübeck continued.
Additionally, the struggle over the debt ceiling is a striking example of Bitcoin’s value proposition. In contrast to the US dollar money supply, Bitcoin’s monetary policy is not dependent on contentious debates in the US Congress, but is written down in the source code. The expansion of the money supply therefore correlates positively with the Bitcoin price.
Uptober: What’s the truth about the myth?
October is considered a historically strong month for Bitcoin. Looking at the past few years, the optimism could actually be justified. Only twice in its history has the No. 1 cryptocurrency ended the month in negative territory.
But: past performances are not an indicator of positive price development. September is considered a historically weak month. As can be seen from the graphic above, this ended surprisingly with an increase of 3.91 percent.
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