Bitcoin Surges Past $87,000 as SEC Proposes Modernized Crypto Custody Rules
The price of Bitcoin surged past $87,000 on Friday morning, marking its first breach of this threshold since September 23. The rally coincided with the release of September nonfarm payrolls data, which showed near-flat employment growth and an unemployment rate increase to 4.2%. According to Bitstamp data, Bitcoin's price had been stuck in the $84,500 to $85,000 range until late Thursday, but then began climbing, gradually rising to $85,500 before a sharp rally added more than $1,000 in under 30 minutes to reach $86,780.
A brief period of relative volatility followed as the price fluctuated between $85,500 and $86,000 before another gradual climb pushed Bitcoin to an intraday peak of $87,219. However, the price was rejected at $87,000, sending it lower before finding support above $85,000, leaving it with a daily gain of nearly 1% at a recent price of $85,188.
The sudden upward surge caught traders shorting the cryptocurrency by surprise, with Coinglass data showing that in the last 24 hours, $142 million in Bitcoin short bets were liquidated versus about $29 million in longs. This is a marked increase from approximately $35 million in leveraged positions liquidated a day earlier.
The weak labor market data provides the Federal Reserve with clear justification to accelerate monetary easing, which would reduce risk-free real yields and diminish the opportunity cost of holding non-yielding assets like Bitcoin. Additionally, the weak payroll data placed downward pressure on the U.S. dollar, and given Bitcoin's historical inverse correlation with the greenback, a softer dollar provides direct tailwinds for Bitcoin.
The SEC has proposed modernized crypto custody rules, which would allow investment advisers and funds to hold digital assets under federal securities laws. The proposal recognizes that third-party qualified custodians may not be available for certain novel digital assets, and permits advisors and funds to hold client crypto directly if no qualified custodian is available, subject to strict guardrails. The SEC announced a 60-day public comment period following the proposal's official publication in the Federal Register.