Crypto Market Weekly Report: Market Weak During the Double Festival, Q1 Next Year May Welcome a Rise Market

Market Overview

This week, the crypto market is showing a downward trend under the influence of the Christmas holiday. Although the market sentiment index has slightly risen from 7% to 10%, it is still in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC, which is mainly based on the US market, still achieved a 1.91% rise, indicating that institutional funds continue to enter the market, injecting a certain degree of confidence.

The DeFi sector's TVL slightly decreased by 0.37% this week to $52.7 billion, but projects with stablecoin yields, such as the Machine Gun Pool, performed exceptionally well. Additionally, the overall supply of stablecoins has continued to grow, indicating that despite the market correction, the underlying liquidity is still flowing in, and stable income projects like the Machine Gun Pool are in high demand.

The AI Agent track continues to receive significant attention from the market, with a total scale reaching 10.9 billion USD. In particular, the aipool model combined with TEE technology has become a new focus of the market, expected to become a new type of asset issuance method following "inscription", demonstrating the development trend of deep integration between AI and blockchain technology.

Due to the impact of the holidays and the overall decline of the market, the Meme coin sector performed poorly this week, with a noticeable decrease in investor participation and capital inflow. Market enthusiasm has temporarily shifted to other sectors, highlighting the high volatility characteristics of this sector.

The public chain sector has shown strong resilience against declines, with Stacks achieving an important milestone for sBTC, BOB advancing the development of the BitVM Bridge, and Taiko launching a new round of ecological plans, indicating that major public chains continue to focus on technological innovation and ecological construction.

Looking ahead, the market is expected to continue a sluggish trend during the New Year's holiday, and it is recommended that investors maintain a defensive allocation, increase the allocation ratio of top assets, while moderately participating in high-yield machine gun pool projects; in the long term, the market generally expects to see a rise in the first quarter of 2025, with AI Agent and DeFi machine gun pool projects deserving of close attention.

Market Sentiment Index Analysis

The market sentiment index has risen from 7% to 10% since last week, still in the extreme fear range.

Altcoins performed weaker than the benchmark index this week, showing a significant downtrend. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased volatility in market prices, making sudden pumps and drops more likely. This results in the market sentiment not being very high. Given the current market structure, it is expected that altcoins will remain in sync with the benchmark index in the short term, with a low probability of independent trends.

When altcoins are in a state of extreme fear, the market is often at a cyclical bottom and a rise can happen at any time.

Overall Market Trend Overview

• The crypto market has been in a downtrend this week, with the sentiment index still in extreme fear.

• Defi-related encryption projects have performed outstandingly, showing that the market continues to focus on improving fundamental returns.

• The AI Agent track project has generated high public sentiment this week, indicating that investors are actively seeking the next market explosion point.

Hot Tracks

AI Agent

This week, the overall market is in a downtrend, with all sectors experiencing a decline. Although most tokens in the AI Agent sector are also on a downward trend this week, they are the most discussed in the market. This week, there is a lot of discussion about the development of models like aipool, which combines AI Agent and TEE, in the future of the crypto market and its impact on Defi.

A booster for the periodic surges in the crypto market is the emergence of new asset issuance methods. For example, past asset issuance methods like ICOs, IEOs, INOs, IDOs, and inscriptions have rapidly propelled market development and boosted crypto market prices. In the current context of the rapid integration of AI and crypto, aipool has become a relatively popular asset issuance method, and it is also a continuation of the "money-throwing FI" trend at the beginning of 2024. If the aipool asset issuance method is widely accepted by the market, we can expect a small wave of asset issuance frenzy brought about by the aipool model in the near future, so we should pay close attention to aipool-type projects.

DeFi Track

TVL rise ranking

In the past week, the top 5 projects by TVL rise in the market:

| Project Name | Weekly Rise | TVL(million) | |---------|----------|--------------| | Resolv | 82.04% | 239.01 | | USDX Money | 74.25% | 446.42 | | Usual | 55.56% | 1599.36 | | Hashnote | 52.54% | 1652.47 | | Spectra | 51.81% | 122.55 |

Resolv(未发币):

• Project Introduction: Resolv is a delta-neutral stablecoin project that revolves around the tokenization of market-neutral investment portfolios. This architecture is based on economically viable and fiat-independent sources of income. This allows for competitive returns to be allocated to the liquidity providers of the protocol.

• Latest developments: This week, Resolv completed an important technical upgrade, successfully transforming into an Omnichain project by integrating LayerZero and StarGate technologies. At the same time, the OFT standard it adopted passed security audits from multiple institutions. Resolv performed remarkably in ecological development this week, attracting a second $100 million influx of funds within the week, with an ecological growth rate of 84%. Its USDC Vault provided up to 36.36% APY in Euler Finance, attracting $5.67 million in TVL within the week. Resolv also launched the wstUSR pool on Pendle.fi and introduced a unified points structure.

USDX Money( not issued ):

• Project Introduction: The USDX Money project is an emerging synthetic US dollar stablecoin protocol aimed at providing a new type of encryption native stablecoin solution through a multi-chain and multi-currency strategy. The core goal of the project is to build the next-generation stablecoin infrastructure and maintain the USDX's peg stability to the US dollar through a Delta neutral hedging strategy.

• Latest developments: USDX Money completed a brand new UI/UX upgrade this week to optimize user interaction experience, while launching USDX/USDT and sUSDX/USDX liquidity pools on a certain DEX, continuously expanding its ecosystem scale, with sUSDX reaching a TVL of $170 million through collaboration with Lista DAO. USDX Money also launched the X-Points incentive program, which includes content creation and angel programs, and held a special Christmas event.

Usual(USUAL):

• Project Introduction: Usual is a stablecoin project supported by a certain trading platform, aiming to provide a new stablecoin solution through a decentralized approach. The core mechanism of the project includes three main tokens: stablecoin USD0, bond product USD0++, and governance token USUAL.

• Latest developments: Recently, Usual secured $10 million in Series A financing led by a well-known institution, and collaborated with the M^0 Foundation to launch the new product UsualM. At the same time, it became the largest USD0/USD0++ pool on a certain DEX. With Usual's TVL exceeding $1.5 billion, it has entered the top five global stablecoins. The DAO treasury has also doubled to $17 million, and the Usual project has launched staking rewards of up to 18,000% APY for USUALx, along with a community airdrop event.

Hashnote( has not issued coins):

• Project Overview: The Hashnote project is a solution focused on institutional cryptocurrency management, aimed at providing transparency and optimizing asset management through blockchain technology. Hashnote combines digital assets and traditional finance to offer users innovative yield enhancement solutions, such as USYC.

• Latest Development: Hashnote has reached a strategic cooperation with CoreDAO this week and participated in its ecological panel meeting, focusing on the launch of an innovative dual staking model for Bitcoin, which combines BTC and Core Token, aiming to provide users with sustainable yield solutions. Meanwhile, the project CEO shared the new strategy at the meeting, which garnered over 14,000 views, demonstrating the market's strong interest in this innovative model.

Spectra(SPECTRA):

• Project Introduction: Spectra is a protocol for the tokenization of future yields. DeFi users can deposit interest-bearing tokens from other protocols within a specified future period and trade in advance the future income generated by the asset. Spectra works by placing interest-bearing tokens (IBT) or any fixed-term yield-bearing asset in a smart contract and issuing future yield tokens (FYT) in return.

• Latest developments: This week, Spectra successfully launched a new governance contract on the Base mainnet, introduced the Gauges and incentivize pages in the Spectra App, and optimized the multi-locking function for veSPECTRA holders to participate more efficiently in the Gauge voting mechanism. Additionally, Spectra completed the APW emission adjustment, with the new emission mechanism implemented at a ratio of 1:20.

In summary, we can see that this week's projects with a rapid rise in TVL are mainly concentrated in the stablecoin yield sector ( machine gun pool ).

Overall performance of the track

• The market capitalization of stablecoins is steadily increasing: USDT dropped from $145.1 billion last week to $144.7 billion, a decline of 0.27%, while USDC rose from $42.1 billion last week to $42.9 billion, an increase of 1.91%. It can be seen that although the market is in a downward trend this week, USDC, which is primarily driven by the US market, still experienced growth, indicating that the purchasing power in the market is still maintaining a continuous inflow of funds.

• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets are continuously decreasing with the ongoing interest rate cuts, while the arbitrage rates of on-chain Defi projects are continuously increasing due to the rising value of cryptocurrency assets. Returning to Defi will be a very good choice.

• Funding situation: The TVL of Defi projects has decreased from 52.9 billion USD last week to 52.7 billion USD now. Although there has been negative growth for two consecutive weeks, the decline is relatively small, at 0.37%. The main reason is that this week, the Western market, led by the US market, is in the Christmas holiday period, resulting in a decrease in both trading volume of various tokens and on-chain activities. Moreover, next week marks the New Year's holiday, and it is expected that there will not be much improvement. Therefore, attention should be focused on the overall TVL changes in the market in January and whether the downward trend continues.

In-depth Analysis

Pump driving force:

The core driving factors of this round of pump can be summarized as follows: Due to the recent downtrend in the market, the APY of various DeFi protocols has declined. However, stablecoin yield projects have raised their yields through token/point rewards, which gives the gun pool projects a significant advantage in terms of APY from the overall market perspective. Specifically:

• Market Environment: Although it is in a bull market cycle, the market has recently been in a downward trend, resulting in a significant decline in the market's base interest rate.

• Interest rate side: The basic lending rate has been raised, reflecting the market's pricing expectations for funds.

• Revenue side: The yield of stablecoin earning projects is higher than that of other projects, thus attracting more users to participate.

This transmission mechanism strengthens the value support of stablecoin yield projects, creating a positive growth momentum.

Potential risks:

Due to the recent upward trend in the market, investors are paying more attention to yield and borrowing leverage, while neglecting the risks of decline. Additionally, this week, due to the Christmas holiday, there has been a sharp reduction in market liquidity, resulting in selling pressure without sufficient liquidity to absorb it, leading to a continuous price drop. This has also triggered liquidations of long contracts in the market, causing losses for investors. The risk of chain liquidations resulting from these liquidations has greatly increased, further lowering prices and liquidating more assets.

Other Track Performance

public chain

The top 5 public chains by TVL rise in the crypto market over the past week:

| Project Name | Recent Seven Days Rise | TVL(million) | |---------|----------|--------------| | Stacks | 16.95% | 130.62 | | BOB | 12.81% | 232.55 | | Taiko | 4.22% | 413.49 | | Cardano | 2.94% | 503.44 | | Sei | 1.23% | 224.31