Bitcoin's rise above $20,000 yesterday was a surprise for the bears: $552 million worth of short positions were liquidated during the day. In total, sellers' losses for all instruments amounted to $1.13 billion.

The latest rise should cheer up investors because the stress level measured in coins at a loss is close to all-time highs. According to Glassnode, over 8 million BTC were bought at higher prices (based on the 30-day moving average).

Historically, October has been a favourable time for Bitcoin, with seven out of nine years showing gains of between 10% and 61%. And with the latest increase, there's every chance of this October once again securing the title of Uptober.

Positive factors for Bitcoin include both intra-network and macroeconomic ones. The former includes the continued outflow of coins from cryptocurrency exchanges to cold wallets, resulting in the aggregate balance falling to January 2018 levels.

Macroeconomic factors include the devaluation of several national currencies and tighter financial supervision. For instance, after Xi Jinping's re-election to a third term, the yuan and the Chinese stock market collapsed, and interest in cryptocurrency is trending again.

China had previously pursued a tight financial policy aimed at reducing capital outflows. For example, citizens can't withdraw more than 100,000 CNY ($13,800) from their account or card abroad in a one-year period. Transfers from China overseas are even more restricted, and amounts of $10,000 or more are likely to be blocked by banks with a requirement to provide additional transaction details.

Xi Jinping's re-election hints at the further tightening of financial supervision in a country with a total of $55 trillion in deposits. This is more than double the US GDP in 2021 ($23 trillion).

StormGain Analytics Team

(a cryptocurrency trading, exchange and storage platform)