The market is sluggish during the double holiday period, and Q1 next year may welcome a rise trend | Crypto Market Weekly

Market Overview

This week, the crypto market is showing a downward trend due to the impact of the Christmas holiday. Although the market sentiment index has slightly risen to 10%, it is still in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC has still achieved a 1.91% rise, indicating that institutional funds are continuously entering the market, injecting some confidence into it.

The DeFi sector's TVL fell slightly by 0.37% this week to $52.7 billion, but projects like the machine gun pool that offer stablecoin yields performed well. The overall supply of stablecoins continues to grow, indicating that the underlying liquidity is still flowing in, and stable yield projects like the machine gun pool are in high demand.

The AI Agent track continues to receive high 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 in the market, expected to become a new type of asset issuance method following "inscription minting", demonstrating the trend of deep integration between AI and blockchain technology.

Due to the impact of the holidays and the overall decline in the market, the Meme coin sector has shown lackluster performance this week, with a noticeable decrease in investor participation and capital inflow, while market enthusiasm has temporarily shifted to other sectors.

The public chain sector shows 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 its sluggish trend during the New Year's holiday, and 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 anticipates a rise in the first quarter of 2025, with AI Agent and DeFi gun pool projects 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. Altcoins performed worse than the benchmark index this week, showing a significant downward trend. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased volatility in market prices, making sudden rises and falls more likely. 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 the extreme fear zone, the market is often at a cyclical bottom, and an upward reversal could happen at any time.

Overview of Overall Market Trends

• The cryptocurrency market has been in a downward trend this week, and the sentiment index remains in extreme fear.

• DeFi-related encryption projects have performed outstandingly, showing that the market continues to pay attention to improving basic yields.

• The AI Agent track project has generated high public opinion this week, indicating that investors are starting to actively look for the next market breakout point.

Hot Tracks

AI Agent

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

A booster for the periodic major rise in the crypto market is the emergence of new asset issuance methods. For example, past asset issuance methods such as ICOs, IEOs, INOs, IDOs, and inscriptions have rapidly propelled the development of the market and the rise in crypto market prices. Against the backdrop of the rapid integration of AI and crypto, aipool has become a highly popular asset issuance method at this stage, and it is also a continuation of "Money FI" at the beginning of 2024. If the aipool asset issuance method is widely accepted by the market, then in the near future, we will witness a small wave of asset issuance boom brought by the aipool model, so we should pay special attention to aipool-type projects.

The top five AI Agent projects by market capitalization:

| Project Name | Market Cap (million) | | ---- | ---- | | Render | 1015.37 | | Fetch.ai | 796.34 | | SingularityNET | 578.87 | | Ocean Protocol | 319.49 | | iExec RLC | 191.37 |

DeFi track

TVL rise ranking

The top 5 projects by TVL growth in the market over the past week (excluding projects with a lower TVL, with a standard of over 30 million USD):

| Project Name | Recent Seven Day 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 (not yet issued): (Recommendation Index: ⭐️⭐️⭐️)

• Project Overview: 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 yield. This allows for competitive returns to be allocated to the protocol's liquidity providers.

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

USDX Money (Unissued Token): (Recommendation Index: ⭐️⭐️⭐️)

• Project Overview: The USDX Money project is an emerging synthetic dollar stablecoin protocol that aims to provide a new type of encryption-native stablecoin solution through a multi-chain and multi-currency strategy. The core objective of the project is to build next-generation stablecoin infrastructure and maintain the USDX's peg stability with the dollar through Delta-neutral hedging strategies.

• Latest developments: USDX Money completed a brand new UI/UX upgrade this week to optimize user interaction experience, and at the same time launched the USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding its ecosystem. Among them, sUSDX reached a TVL of $170 million through cooperation with Lista DAO. USDX Money also launched an X-Points incentive program that includes content creation and angel programs, and held a special Christmas event.

Usual (USUAL): (Recommended Index: ⭐️⭐️⭐️⭐️⭐️)

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

• Latest Development: Recently, Usual secured $10 million in Series A funding led by a certain fund and a certain investment institution, and collaborated with the M^0 Foundation to launch a new product, UsualM. At the same time, it became the largest USD0/USD0++ pool on a certain DEX, with Usual's TVL surpassing $1.5 billion, placing it among the top five stablecoins globally. The DAO treasury has also doubled to $17 million, and the Usual project has launched a staking yield of up to 18,000% APY for USUALx, along with a community airdrop event.

Hashnote (Token Not Issued): (Recommendation Index: ⭐️⭐️)

• Project Introduction: 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 partnership with CoreDAO this week and participated in its ecosystem panel meeting, focusing on the launch of an innovative Bitcoin double-staking model that combines BTC and Core Token, aimed at providing users with sustainable yield solutions. At the meeting, the project's CEO shared the new strategy, garnering over 14,000 views, demonstrating the market's strong interest in this innovative model.

Spectra (SPECTRA): (Recommended Index: ⭐️⭐️⭐️)

• Project Introduction: Spectra is a protocol for the tokenization of future yield. DeFi users can deposit interest-bearing tokens from other protocols within a specified future period and trade the future earnings that the asset will generate in advance. 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 Development: This week, Spectra successfully launched a new governance contract on the Base mainnet and introduced the Gauges and ncentivize pages in the Spectra App. At the same time, it optimized the multi-locking function for veSPECTRA holders, allowing them 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 the projects with rapid TVL growth this week are mainly concentrated in the stablecoin yield sector (gun pools).

Overall performance of the track

• The market capitalization of stablecoins is steadily increasing: USDT decreased from 145.1 billion dollars last week to 144.7 billion dollars, a drop of 0.27%. USDC increased from 42.1 billion dollars last week to 42.9 billion dollars, an increase of 1.91%. It can be seen that although the market is in a downward trend this week, USDC still showed 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 declining with the ongoing interest rate cuts, while the arbitrage rates of on-chain DeFi projects are increasing due to the rising value of cryptocurrency assets. Returning to DeFi will be a very good choice.

• Fund Status: The TVL of Defi projects has risen from 52.9 billion USD last week to 52.7 billion USD now. Although there has been negative growth for two consecutive weeks, the extent of the negative growth is small, at 0.37%. The main reason is that the Western market is in the Christmas holiday this week, resulting in a decline in both trading volume of various tokens and on-chain activities. Next week is the New Year's holiday, and it is expected that there will not be significant changes. 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 behind this round of pump can be summarized as follows: Due to the recent downward trend in the market, the APYs of various Defi protocols have all seen a decline, while stablecoin yield projects have raised yields through token/point rewards, resulting in a significant advantage in APY for liquidity mining projects from an overall market perspective. Specifically:

• Market Environment: Although it is in a bull market cycle, the recent market is in a downward trend, causing the market base interest rate to drop significantly.

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

• Revenue side: The yield of stablecoin yield projects has expanded compared to other projects, thereby attracting more users to participate.

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

Potential risks:

Due to the recent trend of the market being in a pump, market investors are more focused on returns and borrowing leverage, while neglecting the risk of decline. Furthermore, this week, due to the Christmas holiday, there has been a sharp reduction in market liquidity, leading to selling pressure without sufficient liquidity in the market.