Bitcoin briefly pushed above $87,000 on Friday after a weaker-than-expected US jobs report revived expectations of easier monetary policy, only to retreat back into the $84,000–$86,000 range later in the session. Total crypto market capitalization moved above $3 trillion, and the Fear & Greed Index stood at 71.

The macro impulse came from the Bureau of Labor Statistics, which reported that US employers added just 29,000 jobs in September against expectations of 84,000–90,000, with unemployment rising to 4.2%. Yields fell, the market priced out an October Fed hike, and crypto rallied into the print — then gave back much of the move as the session wore on.

Against that backdrop, the day's most consequential developments were regulatory. The SEC proposed a formal crypto custody framework, a bank lobby filed suit against the OCC, and both Circle and Aave used Europe's MiCA review to press for changes to the rules that govern stablecoin reserves and DeFi lending.

Bitcoin's Macro Breakout Meets a Sharp Pullback

BTC/USD touched $87,229 on Bitstamp, nearly retesting its eight-month highs, after the soft payrolls print. Ten-year Treasury yields fell to 5.2% and the 30-year to 5.573%, while the probability of an October rate hike dropped from 64%–70% to just 14%–20% on CME FedWatch.

Leverage moved quickly with price. Bitcoin open interest rose 9.12% to $29.2 billion, with $359.27 million in liquidations, of which $274.64 million were on the short side.

Spots flows provided some support: US spot Bitcoin ETFs took in $102.7 million on October 1 after the prior session's outflows, with BlackRock's IBIT leading at $195 million.

By the end of the day, however, BTC had slipped below $84,000 — a reminder that the rally remains sensitive to positioning rather than driven by durable demand.

The labor data itself also carried a sting. The BLS revised July and August down by a combined 60,000 jobs: July was flipped from a gain of 21,000 to a loss of 10,000, and August was cut by 29,000 from an originally reported 162,000. The BLS attributed the revisions to additional reports and seasonal recalculations.

Those stronger-than-assumed figures were one factor behind the Fed's 25-basis-point hike on September 16 — its first in three years. With September's print now at 29,000 and unemployment at 4.2%, further tightening looks far less certain, even though 16 of 18 FOMC members had been expecting another hike before year-end.

Liquidations and the $85,000 Liquidity Wall

Bitcoin broke through a cluster of sell orders near $85,000 that had capped the price all week, reaching $86,857 and triggering a wave of short liquidations. The scale is disputed across outlets, which is itself a sign of how fast the market moved:

The heavy short component points to an inverted market structure — and to the likelihood that upward volatility accelerates while leverage is rebuilt.

Regulation Day: Custody Rules, a Court Challenge and MiCA

Washington and Brussels were unusually busy.

The SEC proposed rules that would let registered investment advisers, investment companies and BDCs hold crypto assets through state trust companies — or, in a last resort, self-custody. The proposal amends the Investment Advisers Act and the Investment Company Act, and allows state trust companies to act as custodians.

The self-custody exception is conditional: advisers must document the absence of an eligible custodian and reassess that finding quarterly, alongside operational and control requirements. Clients would receive quarterly statements, and fund boards would be subject to oversight of the decision and the safeguards around it. The rule is not in effect; comments are open for 60 days after publication in the Federal Register.

Hours earlier, the ICBA sued the OCC in federal court, challenging the agency's issuance of national trust charters to crypto firms as beyond its authority. The Independent Community Bankers Association argues the charters bypass the equivalence requirements that apply to banks on capital, liquidity, supervision and FDIC insurance.

According to The Defiant, the suit is aimed specifically at the conditional approval of Protego's charter. The OCC declined to comment. ICBA had previously opposed the Digital Asset Market Clarity Act, which stalled in the Senate. The OCC has issued trust charters to Coinbase, Circle, Crypto.com, Protego, Erebor and World Liberty Financial — and a successful challenge could slow that pipeline.

In Europe, Circle asked the European Commission to rewrite MiCA's bank-deposit reserve mandate, replacing the current hard floor with a flexible minimum liquidity requirement, in a submission responding to the Commission's consultation on the regulation's review. Under MiCA, at least 30% of reserves — up to 60% for significant issuers — must sit in bank deposits.

Circle also asked the EU to scrap the 35% concentration cap on a single sovereign and limits on deposits at one bank, while preserving multi-issuance by European and foreign issuers. Its data point is stark: only three of the top 25 stablecoins are MiCA-regulated. The consultation closed on Wednesday, and its outcome will shape how the EU's 2027 review treats large dollar stablecoins.

Aave Labs pushed back on the same review from a different angle, arguing that obligations should attach to control over client funds rather than extend automatically to autonomous protocols. The core dispute is MiCA's ban on interest tied to token holding: Aave maintains that stablecoin lending yield is the price of borrowed funds, not a reward for custody. The protocol has moved more than $3.5 trillion since launching across over 15 networks, and Aave proposes on-chain supervision through blockchain analytics and observer nodes. The next public discussion point is a dialogue in Brussels on October 27.

Elsewhere, an Illinois state court judge sided partly with Kalshi and Coinbase, finding that the state's sports-contract licensing rules likely conflict with federal derivatives law. The question of transaction fees remains unresolved, and the court ordered the parties to propose injunction terms. The state is the defendant, with Kalshi and Coinbase as plaintiffs and the CFTC participating.

Infrastructure: zkAPI, Bank Stablecoins and USDT on Bitcoin

The Ethereum Foundation and the Open Anonymity Project launched zkAPI on Ethereum mainnet, a protocol for paying AI models via zero-knowledge proof without revealing identity. Users deposit ETH or USDC into a vault contract, where the balance exists as a private note; each spend generates a zero-knowledge proof of sufficient funds.

Every payment publishes a serial-number nullifier, so a double spend reveals only the fact of reuse. The server issues a temporary, limited API key, keeping the payment layer separate from the request itself. The client talks to standard OpenAI and Ollama interfaces locally. The repository labels the protocol experimental, and no formal audit has been conducted.

In traditional finance, Fiserv launched a digital asset platform whose first product is Roughrider Coin, a dollar stablecoin for interbank settlement on the Bank of North Dakota network. VersaBank is the issuer and custodian, transactions settle on Solana, and Fireblocks provides the infrastructure. Fiserv serves a network of more than 90 banks and credit unions across North Dakota, with stablecoin settlement being integrated into existing core banking systems.

Utexo also brought USDT to the Bitcoin network using the RGB protocol and Lightning Network, in a $7.5 million round led by Tether. The launch returns the largest dollar stablecoin to the biggest crypto network, where it had previously been unsupported.

Stablecoin scale keeps growing. A joint RWA Foundation and Token Terminal report put total stablecoin market capitalization at $300.9 billion as of October 1, across 195 assets, 152 issuers and 47 networks. Circle added $915 million, Ripple $765.3 million and United Stables $474.2 million, while Tether shed $207.7 million.

Institutional adoption shows up in the payments data too. Visa reported that card-linked stablecoin payment volume rose nearly 200% year over year in its second fiscal quarter, with business and commercial programs accounting for about 17% of the total for fiscal 2026. The consumer segment remains the majority, and Visa supports more than 160 stablecoin card programs.

The Biggest L2 Shutdown in History

Blast is winding down its Ethereum layer-2 network, calling users to withdraw assets to mainnet by October 26. The team said there is no realistic path to economic sustainability, with costs outpacing revenue.

The Biggest L2 Shutdown in History

TVL has fallen more than 98% — from a peak of about $2.2 billion in June 2024 to roughly $32 million — while around $63.5 million remains in the canonical bridge. The BLAST token is down more than 98% from launch.

Withdrawal runs through the Blast interface until October 26, after which assets must be withdrawn directly via the bridge contracts. The team is exiting its Lido position first, which will hold withdrawals for roughly a week before the queue shortens to about 24 hours.

It is the largest L2 shutdown to date, and it raises uncomfortable questions about rollup economics while accelerating consolidation among the remaining networks.

THORChain activated a Zcash liquidity pool after a planned network churn, enabling direct, non-custodial BTC-to-native-ZEC swaps without KYC or wrapped assets. Developers warned the pool starts with extremely thin liquidity and that slippage is likely on large orders. ZEC trades in a $1,330–$1,390 range after gaining more than 1,000% over twelve months.

Aave Labs separately proposed a foundation that would place the Aave brand and intellectual property under DAO oversight. The first step would establish a Cayman Islands vehicle with independent officers; transferring trademarks, domains and the codebase would require separate votes. AAVE rose 8%–13% on the news, aggregate trading activity jumped 68%, and Aave V4 passed $1 billion in deposits in September. Note that one outlet merged this proposal with an unrelated activity roundup, so treat the price move with some caution.

Security: A North Korea Attribution, a Recovered Hack and Two Exploits

Chainalysis attributed the $387 million Bitget hack to a North Korean group, pushing total DPRK-linked crypto theft above $1 billion in 2026. Stolen XRP is being swapped through THORChain, and Bitget CEO Gracy Chen publicly urged the protocol to block the attacker's addresses — the developers declined, citing decentralization. Cointelegraph reported that part of the funds passed through NEAR Intents and its SHIELD layer.

In a separate incident, NEAR Intents halted operations after roughly $3.8 million was stolen through a vulnerability in its deposit and withdrawal layer affecting USDT on BSC. General manager Shafaiet Shevchenko said the attacker was identified and published three return addresses with a 48-hour deadline; none had been funded at first. ZachXBT traced the funds to KuCoin, where they were converted to bitcoin. Shevchenko later reported the full $3.8 million returned — roughly 34.59 BTC landed in the published wallet — and users were promised complete reimbursement. NEAR fell nearly 9% and Bitwise NEAR ETF shares more than 7%.

SlowMist reported an exploit in Aave V3's Loop Safe Module that drained about 114.09 ETH (roughly $305,000) from two Safe multisig wallets in a single transaction. The weakness lay in the module's FlashLoopAdapter access control, exploited via a fake Safe contract the module always trusted, with a WETH flash loan from Morpho used to clear the Aave debt. Funds deposited directly into Aave were unaffected.

Arbitrum paused activations of new Stylus contracts as an emergency security measure. Already active contracts continue to operate and can still be extended, and a new BoLD guard may delay unconfirmed withdrawals if contradictory proofs are submitted.

On the recovery side, the Drift Foundation opened claims and redemption for DFX reimbursement tokens covering users who lost more than $290 million in the April 1 exploit. Each confirmed dollar of loss converts to one DFX at a rate of about 0.0104 USDT — roughly one cent on the dollar — with issuance fixed at about 299.5 million tokens. The claims window runs until January 1, 2028. The rebuilt exchange, renamed Velocity, directs up to 90% of daily net protocol revenue into the recovery pool, and Tether has committed up to 127.5 million USDT. Roughly $9.2 million of stolen funds have been frozen.

Sanctions and Sovereign Policy

The US designated Russia's A7 Network as a significant transnational criminal organization through OFAC, and FinCEN proposed a rule prohibiting transfers in favor of the network's Sub-Agents — the sixth measure of its kind. The rule extends to cryptocurrency and would affect roughly 348,000 institutions, including crypto exchanges.

The A7A5 ruble token, issued by Old Vector, operates on Tron and Ethereum. According to sources cited in reporting, more than 180 entities processed at least $179.1 billion in A7A5 between February 2025 and June 2026.

Separately, the IMF approved a roughly $138–139 million disbursement to El Salvador after the country abandoned its bitcoin accumulation criterion. The Fund said it is trying to "reduce the state role in Bitcoin-related activity" and does not expect further accumulation beyond documented donations. It also wants El Salvador to fully unwind its remaining Chivo exposure. The size of the tranche is reported inconsistently — Bitcoin Magazine cites $139 million, The Defiant $138 million — and the $1.4 billion loan package agreement was signed in December.

Corporate Treasuries and a Contested AI Claim

Shareholders of Armada Acquisition Corp. II approved the business combination with Ripple-backed XRP treasury company Evernorth. Around 20.5 million shares voted in favor and 1.4 million against, with about 69% of votes cast. The deal is expected to close October 7 if remaining conditions are met, with combined company Evernorth Holdings beginning trading on Nasdaq under the ticker XRPN on October 8.

Evernorth intends to hold roughly 473 million XRP, worth about $724 million, and positions itself as the largest public XRP treasury company. The combined entity receives about $300 million in cash at closing, and the deal plus private placements is expected to raise more than $1 billion. Ripple, SBI ($200 million), Pantera Capital, Kraken and GSR are investors.

Finally, a claim circulating in AI circles drew pushback this week. Tavus said its Griffin model passed the Turing test, after 26 of 54 participants (48%) believed they were speaking to a human, which the company called its first Human Interaction Model. The results have not been independently verified and do not follow a standard protocol, a point community members flagged on X. Griffin-Lite remains a research preview for selected testers, with audio-to-video latency averaging 0.43 seconds on Nvidia H100 chips.

Taken together, Friday paired a macro-driven Bitcoin spike with an unusually dense regulatory agenda. The market's near-term direction still hinges on the labor data and the Fed, while the structural story — custody rules, bank stablecoins, a landmark L2 shutdown and a growing stablecoin float — is being written just as fast.