Bitcoin has performed well in the face of a bleak news cycle while stablecoin assets in the crypto ecosystem continue to grow.

• Bitcoin (BTC) trading around $10,515 as of 20:00 UTC (4 p.m. ET). Slipping 0.44% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,362-$10,667
• BTC above its 10-day moving average but below the 50-day, a sideways signal for market technicians.

Bitcoin trading on Coinbase since September 30. Source: TradingView

Bitcoin’s price stumbled in the early hours of Friday, falling to as low as $10,362 on spot exchanges such as Coinbase around 5:00 UTC (1 a.m. ET) before rising to $10,515 as of press time. 

Despite the continuous stream of negative news this past week, the crypto markets have remained resilient, according to Zachary Friedman, chief operating officer of brokerage Global Digital Assets. 

“If we look back, we have seen a hack of Kucoin, a major BitMEX lawsuit and even trouble in the traditional markets through the announcement that [U.S. Pres. Donald] Trump contracted COVID-19,” Friedman said. “Historically, these three collective events would have sent markets reeling. This shows that the market is increasingly filled with more bullish investors [who] believe in the fundamentals.”

Bitcoin’s dip to $10,362 Friday is its lowest price point since Sept. 24, well before the recent torrent of bad news began and perhaps a sign of the world’s oldest cryptocurrency’s capacity to recover quickly.

Bitcoin trading on Coinbase the past ten days. Source: TradingView

Jean-Baptiste Pavageau, a partner at crypto quant trading firm ExoAlpha, anticipates some increased volatility ahead. “Liquidity is a key metric for professional traders,” said Pavageau. “While BitMEX witnessed sometimes unusual price behavior on its exchange, it would not be surprising to observe more of these spikes and crashes while the liquidity dries-up.” 

Indeed, BTC/USD open interest on BitMEX, a measure of liquidity on derivatives exchanges, has dropped since the revelation of its legal troubles, going from $589 million just prior to the news Thursday to $461 million as of press time, a 21% decline.

Open interest in USD terms on BitMEX the past 24 hours. Source: Skew

As open interest on BitMEX wanes, investors are increasingly moving bitcoin to other exchanges. At one point, an outflow of over 11,000 BTC went to other exchanges at 01:00 UTC Friday, including 4,786 BTC to Binance, 3,899 BTC to Gemini and 989 BTC to Kraken, according to data analysis firm CryptoQuant.

BitMEX BTC outflows (red) and price (black) the past three months. Source: CryptoQuant

“It’s going to be a volatile couple of weeks,” added Mostafa Al-Mashita, vice president of trading for Global Digital Assets. “I would not be surprised to see another ‘black swan’ event in the next two months, although bitcoin’s price action has been surprisingly bullish considering the news,” 

Volatility in bitcoin is positive news for options buyers, and that market has 34,100 BTC in bets placed for expiration on Oct. 30.

Open interest in bitcoin options by expiration. Source: Skew

The options market for October expiration provides some probabilities for bitcoin’s future price, as traders see a 63% chance of bitcoin over $10,000, a 50% chance over $10,500 and a 36% chance of $11,000 per 1 BTC.

Bitcoin price probabilities for October expiration. Source: Skew

“It’s a tough market at the moment, up one minute and down the next,” said Rupert Douglas, head of institutional sales for crypto brokerage Koine. “I still think there are risks to the downside. Markets don’t like uncertainty and we’ve sure got that until early November.”

Stablecoins over $20 billion

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday trading around $344 and slipping 2% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

The total market capitalization of stablecoins has grown from $2.6 billion at the start of 2019 to $20 billion by late September. Tether (USDT), at $16 billion, leads the way, with U.S. dollar coin (USDC) in second at $2.5 billion followed by TrueUSD (TUSD) with a $507 million market cap.

Stablecoin market capitalization since 1/1/19. Source: Messari

A yield farmer who chooses to go by the handle devops199fan believes stablecoins provide an important role as an increasing market for stable assets strengthen the decentralized finance, or DeFi, ecosystem. “The stablecoin market cap is starting to go parabolic,” said devops199fan. “I think we’re just getting started. In DeFi specifically, we’ve only scratched the surface of what’s possible in terms of financial primitives and systems.”

Other markets

Digital assets on the CoinDesk 20 are mostly in the red Friday. One winner as of 20:00 UTC (4:00 p.m. ET):

Notable losers as of 20:00 UTC (4:00 p.m. ET):

• Oil was down 4%. Price per barrel of West Texas Intermediate crude: $36.97.
• Gold was flat, in the red 0.14% and at $1,902 as of press time.

• U.S. Treasury bond yields were mixed Friday. Yields, which move in the opposite direction as price, were up most on the 30-year, up to 1.479 and in the green 1.3%.

The CoinDesk 20: The Assets That Matter Most to the Market

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