Aave Drives DeFi Gains as Crypto Markets Weather Higher Bond Yields

Aave Sparks DeFi Rally

Aave surged 11% Tuesday as speculation over a possible token-burn mechanism boosted demand for the DeFi token. The broader crypto market also moved higher, with 72 of the 100 assets in the CoinDesk 100 trading in positive territory.

Bitcoin recovered its Monday losses to trade at $84,170, gaining 0.82% since midnight UTC and 1.4% over the previous 24 hours. The CoinDesk 100 rose 0.89% to 1,904.49.

The rebound came as Treasury yields remained elevated. The 10-year U.S. Treasury yield was 5.234% after closing above 5.2% Monday, keeping it near levels last seen in 2007. The 30-year yield stood at 5.549% after briefly exceeding 5.56% Monday, approaching a level last seen in 2004.

U.S. equities also extended their losses. The Dow Jones Industrial Average dropped more than 300 points Monday, while the S&P 500 and Nasdaq Composite declined 0.8% and 0.9%. Stock futures were mixed Tuesday.

DeFi Leads the Advance

DeFi tokens were at the forefront of the recovery for the second time in a week.

The DeFi Select Index rose 5.0% since midnight, with Aave up 11% and Curve DAO Token gaining 5.2%. The CoinDesk 80 climbed 2.0%, compared with a 1.3% advance for the CoinDesk 5.

The 24-hour performance showed a different picture, with the CoinDesk 5 up 1.7% and the CoinDesk 80 gaining 0.44%.

Privacy-focused tokens continued to lag. Zcash fell 4.1% to $1,422.35 and was down 8.4% over 24 hours. Dash dropped 6.4% to $61.38, while Zcash remained about 13% below its Friday price.

In traditional markets, Brent crude slipped 0.85% to $97.92 and remained below $100 after Monday’s jump. Gold added 0.68% to $4,140, while the dollar index rose 0.18% to 101.36.

Futures Activity Shows Lower Leverage

Crypto futures open interest stood at $149.36 billion at 09:45 UTC, little changed from $150 billion on Monday.

Futures volume climbed 26% to $218 billion following a 70% increase the previous day. Liquidations remained at about $389 million, while the 24-hour long/short volume balance was roughly even.

Bitcoin futures open interest declined to 644,000 BTC from 650,000 BTC, its lowest level since March 4. Funding rates moved back into positive territory after turning negative Monday, while the 24-hour OI-adjusted CVD remained neutral.

The combination points to a reduction in bearish positioning among BTC futures traders.

Whale Positioning Turns More Bullish

Large traders on Binance increased their bullish exposure to Bitcoin.

The long/short ratio for whale positions reached 1.88, while whale accounts registered 1.31. Retail traders had a ratio of 1.24. Ratios above 1 indicate that long positions are greater than shorts.

Elsewhere, leverage continued to decline across major altcoins. ETH and SOL futures open interest remained under pressure, while XRP open interest slipped to 2.37 billion XRP after reaching a four-week high of 2.46 billion XRP.

LINK Sees Fresh Long Exposure

LINK gained 14% over 24 hours, ranking among the market’s strongest performers.

Its futures open interest rose 4% to the highest level since Aug. 22, indicating increased long exposure. LINK was also among the few tokens with positive 24-hour CVD, alongside QNT, ETH and TRX.

Funding remained modest at approximately 2% annualized, suggesting demand for upside exposure without an excessive buildup in leverage.

Zcash, meanwhile, posted a third consecutive daily decline. Its futures open interest fell alongside the price, a sign that long positions may be closing.

ZEC also had the most negative 24-hour CVD among major tokens, reflecting continued selling pressure.

BTC Options Shift Toward Calls

Bitcoin and Ether’s 30-day implied volatility measures remained close to yearly lows after a small rebound Monday. Bitcoin’s BVIV reached 37.4%.

The subdued readings indicate that traders continue to expect relatively limited volatility.

BTC’s seven-day and one-month put-call skews turned slightly negative, signaling that calls had regained a premium over puts.

The shift followed Monday’s trading, when the $84,000 put was the most actively traded BTC option. During the latest 24-hour period, volume was concentrated in calls at the $85,000, $90,000 and $95,000 strikes.

For ETH, the $3,000 call expiring Oct. 9 became the most traded contract, replacing Monday’s leading $2,850 call expiring Oct. 20.

Aave, QNT and CRV Post Strong Gains

Aave traded at $166.55, up 11% since midnight and 13% over 24 hours, making it the top performer among CoinDesk 20 constituents.

The rally followed speculation around “Aavenomics 3.0.” Aave founder Stani Kulechov said the upcoming protocol upgrade could introduce a token-burn mechanism.

QNT resumed its advance, rising 17% to $269.58 and gaining 13% over 24 hours. The move followed a 39% surge Friday and a 16% decline Monday, leaving the token above its level before the earlier rally.

CRV gained 5.2% since midnight and 22% over 24 hours to roughly $0.40. It posted the largest rolling 24-hour gain in the index, although most of the increase occurred during Monday’s U.S. session.

ICP rose 8.3% to $3.39 and was up 14% over 24 hours. AVAX advanced 7% to $11.35 and gained 8.4%.

HBAR slipped 3.2% to $0.12 after giving back part of Monday’s advance but remained 9.5% higher over 24 hours. LTC fell 0.51% to $68.86 and retained a 2.3% 24-hour gain as its halving-related momentum eased.