SEC's crypto custody proposal lifts Aave 11% as Bitcoin reclaims $86,000

The day's main driver was the SEC's proposed custody framework, which would allow registered investment advisers and funds to hold crypto assets directly rather than through a qualified custodian. That's a significant change from the current rules, which have kept many institutional players on the sidelines of DeFi. Aave — a lending protocol where users borrow and lend crypto directly on-chain — was the clearest beneficiary, jumping 11.48% as traders priced in the prospect of institutional capital flowing into DeFi lending markets. Bitcoin's 2.95% climb to $86,449 had additional fuel beyond the regulatory news. September's spot Bitcoin ETF inflows totaled $2.7 billion, confirming that institutional demand held up even as the daily inflow streak snapped earlier in the week. Separately, open interest in Bitcoin perpetual futures (contracts that let traders hold leveraged positions without an expiry date) jumped $2.3 billion, with funding rates — the fee long-position holders pay to shorts — rising alongside it. Elevated funding rates signal that traders are willing to pay a premium to stay long, which reflects genuine conviction rather than passive drift. Solana gained 3.42% and XRP rose 2.74%, both tracking the broader risk-on tone. Quant's 9.53% drop stood out as an outlier with no clear news catalyst — the most plausible explanation is rotation out of interoperability-layer tokens as Bitcoin dominance approaches 60%, leaving less liquidity for smaller-cap assets. The Fear & Greed index at 72 (Greed) is consistent with the day's tone: participants are leaning into risk, but not at the euphoric extremes that have historically preceded sharp reversals.

• –NEAR's cross-chain intent layer suffered a $3.8 million exploit and suspended operations, with the team promising full compensation to affected users.
• –The European Central Bank outlined three potential models for putting central bank money on-chain, a long-term structural development for blockchain infrastructure and stablecoin competition.
• –Bitcoin open interest jumped $2.3 billion in 24 hours, with perpetual funding rates rising — traders are paying a premium for leveraged long exposure ahead of the U.S. jobs report.