October has begun as expected for cryptocurrencies, indicating a resurgence of the “Uptober” phenomenon. Following gains in September, many experts anticipated even greater profits in October. Bitcoin 
$78,302 continues to see strong interest at prices above $122,000, supported by favorable news flow. But how is this connected to the pandemic?
Rise of Cryptocurrencies During the Pandemic
Assets with limited supply tend to experience significant increases when liquidity is abundant. The surge during the pandemic, triggered by stimulus checks, exemplifies this trend. Former President Trump is gearing up to do more, with recent announcements revealing a plan to distribute stimulus checks to U.S. citizens.
The checks, funded by billions in revenue from tariffs, will soon provide Americans with $1,000 to $2,000 to spend. This raises the question: what happens when these funds are invested in scarce assets?
Naturally, such measures that boost the money supply tend to enable greater profits for assets with limited supply. It doesn’t stop there. In a move to inject more liquidity, Trump is also planning the issuance of $1 coins emblazoned with his likeness.
Minting coins falls under the purview of Treasury Departments, and winning next year’s midterm elections requires Trump to support citizens burdened by high interest rates. As an election strategy, this decision is highly logical, signaling more liquidity and further surges.
The U.S. Economy and the Crypto Surge
In October, a rate cut is widely expected. However, the bill aiming to prevent government shutdowns lacks the necessary backing, meaning this pause may last a few more weeks. During this period, no new reports will be released, similar to the absence of today’s Non-Farm Employment report.
The Federal Reserve’s dual mandate, resembling a balance scale, remains a focal point. For the past two months, the weight has been on employment, prompting the Fed’s rate cut last month, yet equilibrium wasn’t achieved. ADP data confirms that labor markets are at their weakest in 4.5 years, and low hiring could trigger unemployment spikes with potential layoffs.
Interest rates are declining, money is being distributed, and cryptocurrencies are responding with increases. The situation is quite clear.
