Crypto Currents: Market continues to struggle amid U.S.-China tensions

The crypto market continued to lose ground on Tuesday following a historic selloff, with the space dropping $150B of combined market value amid trade tensions between the U.S. and China. Meanwhile, the International Monetary Fund warned of risks from the rise of the stablecoin market as major banks have reportedly begun to explore issuing the coins. Stay up on the crypto news that matters with “Crypto Currents,” daily from The Fly. Join us at 2 PM ET for your essential briefing on the fast-moving world of cryptocurrency on FlyCast radio. Also, subscribe to our YouTube channel for the Crypto Fly By weekly recap.

CRYPTO CONTINUES TO LOSE GROUND: Cryptocurrencies continued to withdraw on Tuesday following a significant round of liquidations that led to a sharp selloff over the weekend, Bloomberg’s Sidhartha Shukla reported, citing CoinGecko data. Bitcoin (BTC-USD) dropped as much as 5% to below $110,000, while Ether (ETH-USD) fell 9.3% to below $3,900. Smaller tokens also slid, bringing down the combined market value of all cryptocurrencies by over $150B over a 24-hour period. The drop came amid renewed trade tensions between the U.S. and China, which also weighed on equities, with U.S., European and Asian markets in the red.

STRATEGY RESUMES BITCOIN PURCHASES: Amid the historic selloff, Strategy (MSTR) resumed purchasing more bitcoin, with the company disclosing on Monday the acquisition of 220 bitcoin for an aggregate purchase price of $27.2M during the period of October 6 to October 12. The company’s aggregate bitcoin holdings amounted to 640,250 at an aggregate purchase price of $47.38B and an average purchase price of $74,000 as of October 12. Strategy has been a consistent buyer of the cryptocurrency in recent months but took a break from the purchases last week. The buy was funded using sales of STRF, STRK, and STRD at-the-market stock offerings.

IMF CAUTIONS ON RISKS FROM STABLECOIN MARKET: The International Monetary Fund has warned that a $305B stablecoin market could harm traditional lending and hinder monetary policy, Bloomberg’s Laura Noonan reported, citing the fund. Stablecoins are a less volatile portion of the crypto market as they are typically pegged to the value of fiat currencies, however the sector’s fast growth and rising links to mainstream finance have caused a succession of warnings from regulators and watchdogs. “Because stablecoins may be subject to run risk, fire sales of their reserve assets, such as bank cash deposits and government securities, could spill over into bank deposits and government bond and repo markets,” experts from the IMF sid in its semiannual financial stability report. “This could increase volatility and require central bank intervention.” The warning comes after Reuters reported Friday that ten major banks including Bank of America (BAC), Deutsche Bank (DB), and UBS (UBS) are Dogecoin Foundation, announced Monday it had (TBH). Pursuant to the terms of the agreement, Brag House will acquire House of Doge in a reverse takeover transaction. The companies said the proposed merger, which has been unanimously approved by both Boards of Directors, will advance mainstream Dogecoin (DOGE-USD) adoption and institutionalize Dogecoin’s utility. The companies expect the transaction to drive a regulated, yield-producing Dogecoin economy via new financial products through House of Doge’s partnerships with 21Shares, Robinhood (HOOD), and CleanCore Solutions (ZONE). Currently backed by more than $50M in investment capital and over 837M Dogecoin within the House of Doge framework, House of Doge aims to build the foundation for a scalable, transparent Dogecoin economy. The proposed transaction is subject to customary closing conditions and the approval of Brag House shareholders. Upon closing of the merger, Brag House is expected to issue approximately 594M shares of common stock, along with certain other securities convertible into approximately 69.25M. The majority of new shares will be issued to current common stockholders of House of Doge. As a result, House of Doge will become the majority shareholder of the company. Brag House’s current shareholders will retain ownership of the remaining equity. Completion of the proposed transaction is expected early in 2026.

CITI EYES 2026 LAUNCH FOR CRYPTO CUSTODY: Citi (C) is planning to launch a cryptocurrency custody service in 2026 as Wall Street titans look to broaden their footprint in the digital asset space, CNBC’s Arjun Kharpal reported, citing Biswarup Chatterjee, global head of partnerships and innovation in the services business at Citi. The executive said the bank is making progress on the service, after working on it for the last two to three years. “We have various kinds of explorations … and we’re hoping that in the next few quarters, we can come to market with a credible custody solution that we can offer to our asset managers and other clients,” Chatterjee said.

PRICE ACTION: As of time of writing, bitcoin was trading at $112,482, while ether was trading at $4,128, according to price data from CoinDesk.