Layer-2 and DeFi Tokens Lead Crypto Rally as Fed Hike Fears Ease

Starknet and Arbitrum climbed more than 17% as the 10-year Treasury yield fell back below 5%, while 98 of the 100 assets in the CoinDesk 100 advanced.

The crypto market’s post-Federal Reserve rate-hike recovery continued into Friday, with decentralized finance (DeFi) and layer-2 tokens emerging as the day’s strongest performers. The shift away from the privacy and haven assets that led Thursday’s gains suggests traders are moving back toward higher-risk assets.

Bitcoin rose above $78,000 during European trading hours, gaining 2.1% since midnight UTC and 1.9% over the previous 24 hours. Despite the recovery, BTC remained about 5% below its Sept. 4 monthly peak of $82,284 following two weeks of largely range-bound trading.

Nearly the entire CoinDesk 100 was trading higher, with only two constituents in negative territory. The DeFi Select Index (DFX) was among the strongest performers, climbing 8.3% since midnight UTC and 16% over the past 24 hours.

The broader rally came as the macroeconomic backdrop became somewhat more supportive. The 10-year Treasury yield dropped below 5%, while Brent crude fell under $103 after reaching as high as $109 earlier in the week. The retreat in oil prices eased some of the inflation concerns that had intensified following the Fed’s rate increase.

U.S. equity futures also pointed higher. S&P 500 futures gained 0.3%, while Nasdaq 100 futures rose 0.6%. Gold advanced 1.1% and silver gained 2.8%.

Futures Positioning Strengthens

Crypto derivatives data showed signs of renewed positioning activity. Aggregate futures open interest increased nearly 5% to $141.2 billion, even as daily trading volume declined 3% to $95 billion. The relatively balanced taker buy-sell ratio suggests capital is moving back into the market through broader positioning rather than aggressive short-term momentum trading.

Bitcoin futures open interest increased to 680,000 BTC from 670,000 BTC since midnight UTC as prices advanced. The combination of rising prices and higher OI is generally associated with an increase in long positions. However, the move was modest, and current OI remains well below the 800,000 BTC peak recorded earlier this year, indicating that overall positioning is still relatively light.

Binance data also showed bullish positioning among top traders. The exchange’s top-trader long-short accounts ratio fell to 1.52 from Wednesday’s high of almost 2, but remained above 1. The long-short positions ratio stood considerably higher at 2.36. This indicates that while fewer large traders are positioned long, those maintaining bullish positions have increased their exposure.

Uniswap’s UNI futures also attracted significant interest. Open interest rose to 86.61 million UNI from 76.89 million the previous day, approaching a record high. The increase came alongside a 30% surge in UNI’s spot price and reflected renewed demand for major DeFi tokens amid optimism over potentially more coordinated crypto regulation from the SEC and CFTC.

The 24-hour OI-adjusted cumulative volume delta was positive across most major tokens, with GRAM, SHIB, HBAR and BNB among the exceptions. A positive reading indicates that buyers are showing greater aggression by executing long trades through market orders instead of relying on passive limit orders.

Bitcoin Volatility Falls

With several major catalysts now behind the market, bitcoin’s annualized 30-day implied volatility index, BVIV, fell to 36%. The reading is around the lowest level seen since May and suggests traders expect relatively calmer conditions in the near term.

The Clarity Act vote and the Federal Reserve and Bank of Japan policy meetings have all passed, removing several major sources of uncertainty from the immediate market calendar.

Options positioning has also turned somewhat more bullish in the short term. On Deribit, bitcoin’s one-week put-call skew moved into positive territory, indicating that calls are relatively more expensive than puts. One- and two-month skews, however, continue to show a modest preference for puts.

Ether’s one-week options skew also points to a bullish bias. Activity across the broader options market remains mixed, with both BTC calls and puts appearing among the most actively traded contracts over the past 24 hours.

DeFi and Layer-2 Tokens Surge

Uniswap was the main driver behind Friday’s advance in the DeFi Select Index. UNI gained 13% since midnight UTC and 25% over 24 hours. Ethena’s ENA rose 9.6%, while liquid-staking token Lido added 6.6%.

Layer-2 tokens delivered similarly strong gains. Starknet led the group, climbing 18% on the day and 21% over 24 hours. Arbitrum gained 17% and 25% over the same periods, while Stacks rose 9.2% and Optimism advanced 8.9%.

Starknet reached its highest level since June 19, while Arbitrum, trading at 20.9 cents, reached a price not seen since January.

Solana rose 4.5% to $106.14, although some of the strongest gains came from tokens within its ecosystem. Raydium, a Solana-based decentralized exchange token, jumped 16% to $1.71, while liquid-staking token Jito gained only 1.6%. The divergence suggests traders were targeting decentralized exchange activity rather than broadly buying the entire Solana ecosystem.

Thursday’s strongest performer, meanwhile, largely paused its advance. Zcash traded at $1,490.10, up 1.6% on the day and 7.6% over 24 hours, meaning most of its recent gain came during Thursday’s session.

Privacy-token peer Dash was one of only two CoinDesk 100 constituents to decline, falling 0.53%. World Liberty Financial’s WLFI was the other, slipping 0.31%.

CoinMarketCap’s Altcoin Season Index climbed to 44 out of 100, up from Tuesday’s low of 32. The rebound indicates that speculative appetite has become a more prominent theme in Friday’s crypto market.

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