Market Wrap: Bitcoin Climbs to $11.5K With Record Amount in DeFi

Bitcoin bounced back from Thursday’s drop at a time when more of the cryptocurrency is locked in DeFi than ever before.

• Bitcoin (BTC) trading around $11,511 as of 20:00 UTC (4 p.m. ET). Gaining 2.2% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,231-$11,552
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price trended upward Friday, going as high as $11,552 on spot exchanges such as Coinbase. “Bitcoin has rotated around the most traded price at $11,500,” said Daniel Koehler, liquidity manager at cryptocurrency exchange OKCoin. “Looking down, the next significant support levels are $10,800 and $10,550.”

Read More: Bitcoin, Gold Recover After Jerome Powell Speech Shakes Markets

Jean Baptiste Pavageau, partner at quant trading firm ExoAlpha, says bitcoin’s recovery after gyrating $450 on Federal Reserve Chair Jerome Powell’s comments Thursday continues a larger bullish cycle started earlier in the summer.

“After its recent fake breakout above the $12,000 resistance level, bitcoin saw a short-term trend reversal in its broader bullish trend started in June,” said Pavageau. “On the long term the Fed’s comments are very positive for bitcoin and the crypto markets as a safe heaven because of their limited supply.”

For 2020, bitcoin is up 60% while gold is up almost 30%. Investors often refer to both as safe haven assets.

On the derivatives side, the market saw lots of expirations Friday, with over $740 million in bitcoin options expired on the Deribit platform alone. The expirations were expected to induce some volatility; instead, bitcoin’s price steadily trended upward during the day.

“There’s still an element of absorbing what has happened recently in the DeFi markets and the situation after Powell’s statement,” said Chris Thomas, head of digital assets for Swissquote Bank, referring to decentralized finance. He was “surprised there wasn’t a more aggressive move in the last few days, but it's also good to have some calm for a while.”

Read More: Winklevoss Brothers Say Bitcoin Could Reach $500K

OkCoin’s Koehler told CoinDesk bitcoin’s price could run higher to cap off the week, given where option strikes currently lie. “To me, we probably pin near $11,675 – sell a call and a put at $12,000,” Koehler said, describing a “short straddle” options strategy, which bets that volatility will fall. “This is due to the high level of open interest around that strike rate, which means a lot of premium will need to be reinvested," he added.

Yet more bitcoin in DeFi

Ether (ETH), the second largest cryptocurrency by market capitalization, was up Friday, trading around $397 and climbing 4.8% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

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The amount of bitcoin locked in DeFi, has hit a new high. Over 55,500 BTC is now “locked” in DeFi, which means it is being used for liquidity, gaining a percentage return or yield. This locked amount is the highest yet.

Jean-Marc Bonnefous, managing partner for Tellurian Capital, which has been investing in crypto projects since 2014, says "fear of missing out," or FOMO, is one reason so many "hodlers" are locking their bitcoin in DeFi.

“I assume the BTC holders want to participate in the DeFi opportunities so they will need to wrap their bitcoin into those applications to get some yield,” he said. “Too tempting I guess.”

Other markets

Digital assets on the CoinDesk 20 are all green Friday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• nem (XEM) + 12.7%
• lisk (LSK) + 9.9%
• monero XMR$393.25 + 6.4%

Read More: 21 Bitcoin Mining Farms Stripped of Energy Perks in Inner Mongolia

Equities:

• Asia’s Nikkei 225 closed down 1.4% on reports Japanese Prime Minister Shunzo Abe planned to step down for health reasons. The official announcement came after the close.
• Europe’s FTSE 100 ended the day in the red 0.61% as traders took profits ahead of a long holiday weekend.
• The United States’ S&P 500 gained 0.60% as tech and energy stocks led the index higher.

Read More: Binance’s Shrinking Trading Spreads and Bitcoin’s Jackson Hole Fizzle

Commodities:

• Oil is flat, down 0.10%. Price per barrel of West Texas Intermediate crude: $42.95.
• Gold was in the green 1.8% and at $1,964 as of press time.

Read More: Fed Chair Powell’s Flexible Inflation Views Were Already Priced In

Treasurys:

• U.S. Treasury bond yields were mixed Friday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 14.6%.

Read More: US Files Suit Against Crypto Accounts Tied to North Korea