Bitcoin on track for October gains after streak of monthly losses

The recent rally is largely driven by a more favourable backdrop for risk assets, experts say

Bitcoin was stuck below $20,000 for much of September and October, but rallied above that level in recent days. Reuters
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Bitcoin looks set for gains in October, defying a recent streak of monthly losses as the macro picture shows hints of improving and cryptocurrency market data improve.

The largest cryptocurrency is up 6.5 per cent in October and was trading at about $20,700 as of 11am in the UAE on Saturday, while second-biggest Ether has risen 19 per cent.

Both tokens dropped in five of the previous six months, and bulls had been putting hope into this month as October has historically tended to be positive for crypto prices.

A recent rally doesn’t appear to have been caused by any one factor, but is “largely driven by a more favourable backdrop for risk assets and short liquidations”, Greg Cipolaro, global head of research at NYDIG, wrote in a report.

He cited $615 million of short futures and perpetual swap contracts getting liquidated on overseas exchanges for Bitcoin on October 26 to 27, and $462m of liquidations on Ether.

Bitcoin was stuck below $20,000 for much of September and October, but rallied above that level in recent days as tentative signs emerged the US Federal Reserve might pull back on the pace of rate increases in coming months.

Cryptocurrencies have traded in tandem with risk assets such as the Nasdaq 100 in recent months amid Fed hikes and stubbornly high inflation.

Also helping crypto is Dogecoin’s 40 per cent monthly gain amid anticipation that booster Elon Musk’s purchase of Twitter might lead to initiatives that could spur the memecoin’s price.

Updated: October 29, 2022, 9:58 AM
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