At 02:20 UTC on Saturday (October 10), the Bitcoin price went above the $11,400 level for the first time in over five weeks.
According to data by CryptoCompare, at 02:20 UTC, the Bitcoin price got as high as $11,439 — which is the first time it had gone above the $11,400 level since September 3 — and by 03:10 UTC, it reached a high of $11,482. Currently (as of 09:00 UTC), Bitcoin is trading around $11,382, up 4.6% in the past 24-hour period.
So, what’s behind Bitcoin’s price surge?
First, there is renewed optimism that the Trump administration and House Democrats, led by House Speaker Nancy Pelosi, will manage to strike a deal on the next major COVID-19 relief package within the next week or two.
President Trump seems to realized that if he wants to increase his chances of winning the U.S. presidential election in November he needs to sign a fiscal stimulus bill before the election. This means making a deal with Pelosi — via his representative Treasury Secretary Steven Mnuchin — and then putting pressure on Senate Majority Leader Mitch McConnell to get the bill (negotiated with Pelosi) passed in the Senate.
On Friday, around 11:48 EDT, Trump sent out tweet in which he urged stimulus negotiators to “go big”, seemingly confirming what he had said earlier in the day during his chat with radio host Rush Limbaugh, where he said that he “would like to see a bigger stimulus package frankly than either the Democrats or Republicans are offering.”
Then, less than three hours later, Pelosi’s spokesperson, Drew Hammill, tweeted (around 14:38 EDT) that Pelosi and Mnuchin had had a 30-minute conversation at 13:40 EDT and that Mnuchin had come back to the negotiation table with a new proposal (which is believed to cost around $1.8 trillion, i.e. $400 billion less than what House Democrats are asking for).
This renewed optimism about the state of the negotiations over the next major fiscal stimulus package helped the Dow, the S&P 500, and the Nasdaq Composite to advance 3.3%, 3.8%, and 4.6% respectively this past week.
Second, the recent investments in Bitcoin by two Nasdaq-listed companies — MicroStrategy and Twitter — has raised spirits in the Bitcoin community because many are seeing the moves by these two companies (to use Bitcoin as a treasury reserve asset) as the start of a new trend since it is now likely that some other list companies will consider doing something similar, which would help with the problem of increasing institutional adoption of Bitcoin.
This sentiment was echoed by Tyler Winklevoss, Co-Founder and CEO of crypto exchange Gemini:
Third, the U.S. dollar index (DXY) closed at 93.06 yesterday, down 0.58%. Why does this matter? Well, since March, Bitcoin has been showing a negative correlation with the U.S. dollar.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.