Aave leads DeFi higher as crypto shrugs off surging bond market

Bitcoin recovered Monday's losses to trade at $84,170 on Tuesday, up 0.82% since midnight UTC and 1.4% over 24 hours, with 72 of the 100 CoinDesk 100 constituents higher and the index adding 0.89% to 1,904.49.

The bid is arriving despite conditions that have been suppressing risk assets for a week, the 10-year Treasury yield sitting at 5.234% after ending Monday above 5.2%, near levels last seen in 2007, and the 30-year at 5.549% having topped 5.56% on Monday, around a 2004 high.

U.S. stocks fell for a second session on Monday, the Dow dropping more than 300 points and the S&P 500 and Nasdaq Composite shedding 0.8% and 0.9%, with futures mixed on Tuesday morning.

Decentralized finance (DeFi) is driving the move for the second time in a week, with the DeFi Select Index (DFX) gaining 5.0% since midnight, led by lending protocol token aave at 11% and curve dao token at 5.2%. The CoinDesk 80 rose 2.0% against the CoinDesk 5's 1.3%, though the ranking inverts over 24 hours, where the CD5's 1.7% beats the CD80's 0.44%.

Privacy tokens are the exception and the sharpest decliners, zcash (ZEC) tumbled 4.1% to $1,422.35 and 8.4% over 24 hours, and dash 6.4% to $61.38, extending a retreat that has taken zcash roughly 13% below where it traded on Friday.

Brent crude eased 0.85% to $97.92, holding below $100 after Monday's spike, while gold added 0.68% to $4,140 and the dollar index firmed 0.18% to 101.36.

• Leverage keeps shrinking: Futures OI held at $149.36 billion as of 09:45 UTC, little changed from yesterday's $150 billion. Volume rose 26% to $218 billion after yesterday's 70% jump, and liquidations were flat at $389 million. The 24-hour long/short volume ratio is now balanced, after sellers had a slight edge yesterday at 46.9% to 53.1%.
• BTC bears lose their grip: Futures OI slipped to 644K BTC from 650K yesterday, the lowest since March 4. However, funding rates are back above zero after yesterday's negative readings, and the 24-hour OI-adjusted CVD is neutral. The bearish lean among remaining positions has faded.
• Binance whales turn extremely bullish on BTC: Whale sentiment is up from bullish yesterday. The long/short ratio stands at 1.88 for whale positions and 1.31 for whale accounts, versus 1.24 for retail. A reading above 1 means more longs than shorts.
• Altcoin leverage keeps draining: ETH and SOL OI remain in a downtrend. XRP has reversed yesterday's small rise, when OI hit a four-week high of 2.46 billion XRP before easing to 2.37 billion.
• LINK draws fresh longs: The token jumped 14% over 24 hours, one of the best performers. Futures OI rose 4% to its highest since Aug. 22, which points to new longs. LINK is also among the few tokens with positive 24-hour CVD, alongside QNT, ETH and TRX. Funding sits at a mild 2% or so annualized, which shows demand for upside without overheating.
• ZEC sellers stay in control: The token fell for a third straight day and futures OI declined with it, suggesting longs are exiting. Its 24-hour CVD is the most negative among majors, which shows aggressive selling.
• Volatility stays asleep: Bitcoin and ether's 30-day implied volatility indices remain near year-to-date lows after yesterday's small bounce, which had lifted BVIV to 37.4%. Traders still expect calm markets.
• Options traders swap puts for calls: BTC's seven-day and one-month put-call skews have turned slightly negative, meaning calls are trading at a premium again. This is a shift from yesterday, when an $84,000 put was the most traded contract. The 24-hour volume favors calls at the $85,000, $90,000 and $95,000 strikes. For ETH, the $3,000 call expiring Oct. 9 is the most traded contract, up from yesterday's top pick, the $2,850 call expiring Oct. 20.