Aave leads DeFi higher as crypto shrugs off surging bond market

By CoinDesk

Bitcoin (BTC) 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 (AAVE) at 11% and curve dao token (CRV) 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 (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.

Derivatives positioning

  • 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.

Token talk

  • Aave (AAVE) is the standout at $166.55, up 11% since midnight and 13% over 24 hours, the largest gain among the CoinDesk 20 constituents. The rise comes after speculation around “Aavenomics 3.0,” with the project’s founder Stani Kulechov saying the protocol may add a token burn mechanism as a part of the upcoming upgrade.
  • Quant (QNT) has resumed its run, rising 17% to $269.58 and 13% over 24 hours, three sessions after gaining 39% on Friday and giving back 16% on Monday, a round trip that leaves it higher than where it started.
  • Curve dao token (CRV) rose 5.2% since midnight but 22% over 24 hours to $0.40, the largest rolling gain in the index, meaning most of the move landed in Monday's U.S. session rather than this morning.
  • Internet computer (ICP) added 8.3% to $3.39 and 14% over 24 hours, with avalanche (AVAX) up 7.0% to $11.35 and 8.4%, both recovering ground lost in Monday's selloff.
  • Hedera (HBAR) has given back part of Monday's jump, falling 3.2% to $0.12 while holding a 9.5% gain over 24 hours, and litecoin (LTC) slipped 0.51% to $68.86 and 2.3% over the rolling day as its halving trade cools.

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.