Bitcoin climbed back above $78,000 on Friday, capping three straight days of gains as traders rotated into decentralized finance and layer-2 tokens following a week dominated by the Federal Reserve's first rate hike in more than three years and the stalling of crypto legislation in Congress.
The leading cryptocurrency rose 2.1% since midnight UTC and 1.9% over the prior 24 hours, trading near $78,131 during the European morning. The advance came despite a difficult stretch earlier in the week that saw Bitcoin briefly dip below $75,000 after the U.S. Senate failed to advance the CLARITY Act and the central bank signaled that additional tightening may be on the table before year-end.
Total crypto market capitalization climbed 2.55% to roughly $2.68 trillion, according to CoinMarketCap, as all but two constituents of the CoinDesk 100 posted gains.
DeFi and layer-2 tokens lead the rotation
The sharpest moves came from tokens tied to decentralized finance and scaling networks, a shift from Thursday when privacy and haven assets outperformed. Starknet (STRK) jumped 18% on the day and 21% over 24 hours, reaching its highest level since June 19. Arbitrum (ARB) followed with a 17% daily gain and 25% over 24 hours, trading at 20.9 cents -- its priciest level since January.
Uniswap (UNI) rose 13% since midnight UTC and 25% over the past 24 hours, driving the CoinDesk DeFi Select Index to an 8.3% surge on the day and 16% over 24 hours. Ethena (ENA) gained 9.6%, while liquid-staking token Lido (LDO) added 6.6%.
Other layer-2 tokens matched the strength: Stacks (STX) climbed 9.2% and Optimism (OP) advanced 8.9%. Solana (SOL) added 4.5% to $106.14, though the sharper action sat within its ecosystem, where the DEX token Raydium (RAY) rose 16% to $1.71 while Jito (JTO) lagged at 1.6%, suggesting traders were betting on exchange volume rather than a blanket bid for the chain.
Thursday's leader stalled. Zcash (ZEC) traded at $1,490.10 for a gain of just 1.6% on the day against 7.6% over 24 hours, meaning nearly all of its advance occurred the previous session. The rival privacy token Dash (DASH) was one of only two CoinDesk 100 constituents in the red, losing 0.53%.
The recovery found support in a softer macro environment. The 10-year Treasury yield slipped back below 5%, while Brent crude eased under $103 after trading as high as $109 earlier in the week, taking some of the heat out of the inflation scare that followed the Fed's quarter-point rate increase to a range of 3.75% to 4.00%.
Equity index futures also showed strength, with S&P 500 and Nasdaq 100 futures rising 0.3% and 0.6%, respectively. Gold and silver added 1.1% and 2.8% apiece.
Fed Chair Kevin Warsh reiterated the central bank's commitment to prioritizing inflation control, and projections showed 16 of 18 officials expected at least one more increase before the end of 2026. The rate decision had largely been priced into markets, helping Bitcoin avoid another sharp decline during the press conference.
Futures market signals structural positioning
The derivatives market pointed to a revival in positional trading rather than aggressive momentum chasing. Cumulative open interest across crypto futures expanded nearly 5% to $141.2 billion, contrasting with a 3% dip in daily trading volume to $95 billion. Taker buy-sell volume remained balanced, suggesting capital is entering the market structurally.
Bitcoin futures open interest ticked up to 680,000 BTC from 670,000 BTC since midnight UTC, a combination typically read as a build-up of long positions. However, the increase remains small, and the tally sits well below the 800,000 BTC peak hit earlier this year.
On Binance, the top trader long-short accounts ratio pulled back to 1.52 -- still bullish but lower than Wednesday's high of nearly 2. The long-short positions ratio remained elevated at 2.36, indicating that fewer large holders are leaning long, but those who are have greatly increased their bet sizes.
Among altcoins, open interest in futures tied to Uniswap's UNI surged to 86.61 million tokens, flirting with an all-time high and up from 76.89 million tokens the previous day. The expansion coincided with a 30% explosion in the token's spot price, reflecting renewed appetite for major DeFi assets amid optimism surrounding coordinated crypto regulations from the SEC and CFTC.
Note: Data sourced from market reports as of Friday's European session.
With the CLARITY Act vote and the Fed and Bank of Japan interest-rate meetings out of the way, bitcoin's annualized 30-day implied volatility index dropped to 36%, a level that has acted as a floor since May. The decline points to expectations for near-term market calm.
In options listed on Deribit, BTC's one-week put-call skew turned positive, pointing to relative richness of calls over puts. ETH's one-week skew also showed bullishness, though 24-hour volume rankings displayed mixed sentiment with both BTC calls and puts featuring among the most active contracts.
The analyst consensus has shifted toward the view that sellers are exhausted and the metaphorical bottom is already in. September is historically Bitcoin's weakest month, and holding steady at -1.5% on the month while up about 32% for the quarter is being read as a major win.
Kevin O'Leary told The Block at the Avalanche Summit that he is "back in the saddle buying new positions" for the next cycle, while cautioning that he does not expect the CLARITY Act to pass before the midterms.
Crypto trader Daan Crypto Trades noted that Bitcoin had already removed most of the liquidity below the market when it swept the August lows. He identified $80,000 and $82,000 as the largest remaining clusters within the wider range. "The big clusters that are left in this range sit at $80K & $82K," he said.
Analyst Lennaert Snyder said Bitcoin's ability to defend $75,000 during the Fed decision supported a possible long setup. Recent declines had attracted short positions, creating conditions for a squeeze if the market moves higher. "I'm looking to scalp-long towards the 77.3K POC first, reclaiming that is the next bullish trigger that opens the door to my next targets up to the extremes at 78.5K," Snyder said.
The week's selling was triggered in part by the U.S. Senate's failure to advance the CLARITY Act. The procedural vote ended 49-50, leaving the bill 11 votes short of the 60 required to begin debate. The proposal sought to divide digital asset oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The setback dampened hopes for a comprehensive regulatory framework before year-end. However, the SEC and CFTC have signaled they will proceed with rulemaking under existing authorities, which could soften the disappointment if concrete measures materialize in the coming weeks.
Looking ahead, traders are watching whether Bitcoin can sustain its position above $78,000. A move above the Bollinger Band midpoint at $78,028 would improve the short-term technical structure, while a break below $75,000 would hand control back to sellers. The upper resistance zone sits near $80,000, with additional liquidity extending toward $82,000.