Bitcoin slips below $85,000 as SEC proposal targets a custody bottleneck

Traders betting on a Bitcoin decline saw about $142 million of their positions forcibly closed over 24 hours as the cryptocurrency briefly broke above $87,000. Yet the rally did not hold. Behind the price swings, a U.S. regulatory proposal offered funds and investment advisers a possible way around a practical obstacle: finding an eligible firm to safeguard their digital assets.

Bitcoin traded at $84,612.4 at 21:55 ET on Friday, or 01:55 GMT, down 0.35% in the latest snapshot, according to Investing.com Commodities. Earlier, it reached $87,219, its first move above $87,000 since Sept. 23. The retreat put it back near the $84,500–$85,000 range where it had spent much of the previous session.

A different route for holding crypto

The Securities and Exchange Commission proposed custody changes that would let investment advisers and funds hold certain digital assets directly when a qualified outside custodian is unavailable. Custodians are firms that safeguard assets for clients. The proposed alternative would come with safeguards, rather than give firms unrestricted permission to hold any cryptocurrency themselves.

The proposal addresses a gap in existing arrangements, which have largely depended on traditional custodians. Advisers seeking exposure to digital assets can face difficulties when qualified custody services are scarce. According to Investing.com Commodities, the proposed changes would create another route for holding those assets under federal securities rules, adding to expectations of broader institutional participation. They remain a proposal, not an operating rule.

Softer U.S. economic figures also gave Bitcoin some support. September nonfarm payrolls, a measure of employment outside agriculture, increased by 29,000 against expectations of 90,000. Treasury yields and the dollar declined as markets reconsidered the outlook for Federal Reserve interest rates. The source linked that economic backdrop to support for Bitcoin, alongside the custody announcement.

The sharp move higher was costly for traders positioned against the cryptocurrency. Coinglass figures cited in the source showed roughly $142 million in liquidated Bitcoin shorts, or bets on falling prices, over 24 hours. That compared with about $29 million in liquidated longs, which bet on gains. Liquidation means a trading position is forcibly closed, underscoring how quickly the move disrupted bearish bets.

Corporate buyers pursue different models

Corporate demand remains another strand of the market story. Strategy Executive Chairman Michael Saylor outlined this week how the company funds its Bitcoin-focused business while maintaining dollar reserves for dividends and debt interest. Its approach separates Bitcoin purchases from the cash needed to meet obligations. Strategy’s STRC preferred shares, a share class with dividend payments, currently carry a 12% annualized dividend rate. The company wants to move to daily dividend accruals, meaning dividends would build up each day.

Supercycle Finance described a different approach. It plans to raise up to $75 million through a proposed offering, putting most of the proceeds toward Bitcoin purchases. Rather than focus only on accumulation, it intends to sell Bitcoin when it considers prices elevated and hold interest-bearing assets between purchases. Elsewhere, the late-Friday snapshot was mostly weaker: Solana fell 0.34% to $119.12 and BNB slipped 0.40% to $768.96, while Cardano rose 0.49% to $0.2476.

The next steps are procedural rather than settled outcomes. Strategy shareholders are scheduled to vote on the dividend change on Oct. 28. For the SEC custody proposal, publication in the Federal Register will start a 60-day public comment period—the next stage for a measure aimed at easing an institutional access bottleneck.