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

Market Overview

This week, the crypto market showed a downward trend under the influence of the holiday. The market sentiment index rose slightly to 10%, but it remains in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC still achieved a growth of 1.91%, indicating that institutional funds continue to enter the market, injecting a certain level of confidence.

The DeFi sector's TVL slightly decreased by 0.37% this week to $52.7 billion, but projects like the gun pool with stablecoin yields performed well. The overall supply of stablecoins continues to grow, indicating that despite the market correction, the underlying liquidity is still flowing in, and stable yield projects like the gun pool are being sought after.

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

Due to the impact of the holidays and the overall market decline, the Meme coin sector performed poorly this week, with a significant decrease in investor participation and capital inflow, and market interest has temporarily shifted to other sectors.

The public chain sector shows strong resilience against downturns, 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 its sluggish trend during the New Year's holiday. Investors are advised to maintain a defensive allocation, increasing the proportion of top assets while moderately participating in high-yield gun pool projects. In the long term, the market generally expects a pump in the first quarter of 2025, and AI Agent and DeFi gun pool projects are worth paying special attention to.

Market Sentiment Index Analysis

• The market sentiment index rose from 7% last week to 10%, still in the extreme fear zone.
• Altcoin performed weaker than the benchmark index this week, showing a significant decline. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased market price volatility, making it prone to sudden rises and falls. It is expected that Altcoin will keep pace with the benchmark index in the short term, with a low probability of independent market trends.
• When Altcoins are in extreme fear zones, the market is often at a stage bottom and can flip upwards at any time.

Overview of Overall Market Trends

• The crypto market has been in a downtrend this week, and the sentiment index remains in extreme fear.
• DeFi-related encryption projects have performed outstandingly, showing the market's continued focus on improving basic yields.
• The AI Agent track project has seen high public sentiment this week, indicating that investors are actively looking for the next market breakout point.

Hot Topics

AI Agent

This week, the overall market is in a downtrend, with all sectors experiencing a decline. Although most token prices in the AI Agent sector have also been on a downward trend this week, the level of discussion in the market is the highest. This week, there is considerable discussion about the development of the aipool model, which combines AI Agent + TEE, and its impact on DeFi in the future crypto market.

If the asset issuance method of aipool is widely accepted by the market, then in the near future, there will be a small wave of asset issuance boom brought by the aipool model, so we should pay close attention to aipool type projects.

DeFi track

TVL rise ranking

The top 5 projects with the highest TVL rise in the market over the past week (not including projects with a smaller TVL, standard set at over 30 million USD):

1. Resolv: 82.04%
2. USDX Money: 74.25%
3. Usual: 55.56%
4. Hashnote: 52.54%
5. Spectra: 51.81%

Overall performance of the track

• The market capitalization of stablecoins is steadily increasing: USDT has slightly decreased by 0.27%, while USDC has risen by 1.91%. The growth of USDC, which is primarily focused on the US market, indicates that the main buying force in the market is still maintaining a continuous influx of funds.

• Liquidity is gradually increasing: The risk-free arbitrage rate in the traditional market continues to decline as interest rates decrease, while the arbitrage rate of on-chain DeFi projects increases due to the rise in the value of cryptocurrency assets. Returning to DeFi will be a good choice.

• Fund Status: The TVL of DeFi projects has decreased slightly by 0.37% to $52.7 billion, mainly due to the Western market being in the Christmas holiday, with both token trading volume and on-chain activity declining. It is expected that there will not be much change during the New Year's holiday next week. It is recommended to pay close attention to the overall TVL changes in January and to monitor whether the downward trend continues.

In-depth Analysis

pump driving force:

1. Market Environment: Although it is in a bull market cycle, the recent market decline has led to a significant decrease in the base interest rate.
2. Interest rate side: The base lending rate has risen, reflecting the market's expectations for funding pricing.
3. Earnings side: The yield of stablecoin yield projects has expanded compared to other projects, attracting more users to participate.

Potential risks: The market has been continuously pumping recently, with investors paying more attention to yields and borrowing leverage while ignoring the risks of a downturn. This week's Christmas holiday has caused a sharp reduction in liquidity, and the market's selling pressure lacks sufficient liquidity support, resulting in a continuous drop in prices and triggering the liquidation of long contracts, which has increased the risk of a cascading liquidation.

Other tracks performance

public chain

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

1. Stacks: 16.95%
2. BOB: 12.81%
3. Taiko: 4.22%
4. Cardano: 2.94%
5. Sei: 1.23%

rise leaderboard overview

The top 5 tokens with the highest rise in the market over the past week (excluding tokens with very low trading volume and meme coins):

1. ZEN (Horizen): 124.91%
2. MOCA (Moca Network): 108.87%
3. PHA (Phala Network): 105.84%
4. AGLD (Adventure Gold): 73.77%
5. MOVE (Movement): 66.81%

Meme Token Rise Rankings

1. LUNA (Luna by Virtuals): 60.21%
2. KOMA (Koma Inu): 37.49%
3. AIXBT (aixbt by Virtuals): 30.37%
4. SPX (SPX6900): 21.45%
5. TURBO (Turbo): 20.47%

This week, Meme projects have been significantly affected by the overall decline in the crypto market. Due to the Christmas holiday, there are fewer users participating in trading, leading to a withdrawal of market funds, and the number of investors participating in Meme coin projects has noticeably decreased.

social media hotspot

The most关注 of social media this week is the L1s project. Due to the Christmas holiday, the market dominated by the United States has entered a holiday phase, resulting in a significant decline in market liquidity. Ordinary investors have reduced their on-chain investment activities and engaged in selling behaviors, leading to a more substantial decline in the market, but the declines of various public chains are relatively small.

market theme overall overview

According to weekly return rate statistics, the SocialFi sector performed the best, while the RWA sector performed the worst.

• SocialFi track: The main player TON accounts for 91.07%, with a counter-trend pump of 6.3% this week.
• RWA track: Major projects OM, ONDO, and MKR fell by 10.76%, 19.86%, and 8.28% respectively, with significant declines.

Next Week's Major Events in the Crypto Market

• December 30: The European Securities and Markets Authority releases MiCA encryption regulations implementation
• January 2: Number of initial jobless claims in the US for the week
• January 3: The court approved the FTX Chapter 11 reorganization plan to take effect.

Outlook for Next Week

macroeconomic factors analysis

• Entering the New Year's holiday, there are fewer macro data releases.
• In previous years, during the New Year's Day holiday, the market purchasing power led by the US usually continues the sluggishness seen during the Christmas period, and market volatility may increase.

sector rotation trend

• DeFi track: Investors generally expect the market to pump in the first quarter of next year, with more participation in machine gun pool projects to increase holding returns.
• AI Sector: The AI Agent track continues to attract attention, with a market size reaching $10.9 billion; the aipool asset issuance model based on AI Agent + TEE has received widespread attention.

investment strategy recommendations

• Maintain a defensive allocation, increase the allocation ratio of top assets such as BTC and ETH, and enhance the risk-hedging properties of assets.
• You can moderately participate in high-yield machine gun pool DeFi projects.
• Investors are advised to be cautious, strictly control their positions, and manage risks properly.