The market is weak during the double festival period, and Q1 next year may welcome a pump | Crypto market weekly report

Market Overview

This week, the crypto market shows a downward trend influenced by the Christmas holiday. Although the market sentiment index rose slightly from 7% to 10%, it remains in the extreme fear zone. Notably, despite the overall market weakness, USDC, which is mainly focused on the US market, 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 Gun Pool that offer stablecoin yields performed remarkably well. The overall supply of stablecoins continues to grow, indicating that despite the market correction, the underlying liquidity is still flowing in, and projects like Gun Pool that provide stable returns are in high demand.

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 focus in 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 holiday and the overall decline in the market, the Meme coin sector performed poorly this week, with a noticeable decrease in investor participation and capital inflow, and market enthusiasm has temporarily shifted to other sectors.

The public chain sector has shown strong resilience against downturns, with Stacks achieving an important milestone for sBTC, BOB advancing the development of 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 crypto pool projects. In the long term, the market generally anticipates a potential pump in the first quarter of 2025, with AI Agent and DeFi crypto pool projects worthy of special attention.

Market Sentiment Index Analysis

The market sentiment index has risen from 7% last week to 10%, still within the extreme fear range. Altcoins performed worse than the benchmark index this week, showing a significant downtrend. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased market price volatility, 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 a state of extreme panic, the market is often at a temporary bottom, and an upward reversal can happen at any time.

Overview of the Overall Market Trend

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

• Defi-related encryption projects have shown outstanding performance, demonstrating the market's continuous focus on enhancing basic returns.

• The AI Agent sector project has garnered high public attention this week, indicating that investors are actively looking for the next market breakout point.

Hot Tracks

AI Agent

This week, the market is in a downward trend, with various sectors also in a state of decline. Although most tokens in the AI Agent sector are also experiencing a downward trend this week, they are the most discussed in the market. This week, there has been considerable discussion about the development of the aipool model, which combines AI Agent and TEE, and its impact on Defi in the future crypto market.

A driving force behind the periodic major rises in the crypto market is the emergence of new asset issuance methods. For example, past asset issuance methods such as ICO, IEO, INO, IDO, and engraving have all propelled the development of the market and the rise in crypto market prices. With the rapid integration of AI and crypto, aipool has become a relatively hot asset issuance method at this stage, and it is also a continuation of the "money printing FI" trend at the beginning of 2024. If the aipool asset issuance method is widely accepted by the market, we will soon witness a small wave of asset issuance spree brought about by the aipool model, so we should pay close attention to aipool-type projects.

The top five AI Agent projects by market capitalization:

| Project Name | Market Cap ( million USD ) | 24h Rise and Fall | 7d Rise and Fall | |---------|--------------|----------|---------| | Worldcoin | 333.87 | -2.25% | -12.19% | | Fetch.ai | 317.03 | -5.47% | -20.93% | | Ocean Protocol | 222.30 | -4.45% | -14.66% | | SingularityNET | 217.17 | -5.80% | -18.75% | | Oasis Network | 189.38 | -5.14% | -13.26% |

DeFi track

TVL rise ranking

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

| Project Name | 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 Introduction: Resolv is a Delta-neutral stablecoin project that focuses on the tokenization of market-neutral investment portfolios. The architecture is based on economically viable and fiat-independent sources of yield. This allows 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. Meanwhile, the OFT standard it adopted passed security audits from multiple institutions. Resolv performed outstandingly in ecological development this week, attracting a second $100 million in funding inflow, with an ecological growth rate of 84%. Its USDC Vault provided an APY of up to 36.36% in Euler Finance, 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): (Recommended Index: ⭐️⭐️⭐️)

• Project Introduction: The USDX Money project is an emerging synthetic 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 a next-generation stablecoin infrastructure and maintain the peg stability of USDX to the 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 Curve Finance, continuously expanding its ecosystem. Among them, sUSDX reached 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): (Recommendation Index: ⭐️⭐️⭐️⭐️⭐️)

• Project Introduction: Usual is a stablecoin project supported by a certain trading platform, aimed at providing a new stablecoin solution through decentralized methods. 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 funding led by a certain institution and collaborated with the M^0 Foundation to launch a new product, UsualM. It also became the largest USD0/USD0++ pool on a certain platform, with Usual's TVL surpassing $1.5 billion, making it one of the top five stablecoins globally. The DAO treasury has also doubled to $17 million. The Usual project launched staking rewards of up to 18,000% APY for USUALx and initiated a community airdrop event.

Hashnote (not yet issued): (Recommendation Index: ⭐️⭐️)

• Project Introduction: The Hashnote project is a solution focused on institutional cryptocurrency management, aiming to provide transparency and optimize 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 ecosystem panel meeting, focusing on the launch of an innovative Bitcoin dual-staking model that combines BTC and Core Token, aiming to provide users with sustainable yield solutions. At the same time, the project CEO shared a new strategy at the meeting, which garnered over 14,000 views, demonstrating strong market interest in this innovative model.

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

• Project Introduction: Spectra is a protocol for the tokenization of future yields. DeFi users can deposit interest-bearing tokens from other protocols for a specified future period and trade the future yields that the asset will generate in advance. The way Spectra works is by placing interest-bearing tokens (IBT) or any fixed-term yield-bearing assets into 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 and introduced the Gauges and ncentivize pages in the Spectra App, while optimizing the multi-locking feature for veSPECTRA holders to participate more efficiently in the Gauge voting mechanism. Spectra has completed the APW emission adjustment, with the new emission mechanism executed at a 1:20 ratio.

In summary, we can see that the projects with rapid TVL growth this week are mainly concentrated in the stablecoin yield sector (money gun pool).

Overall performance of the track

• The market capitalization of stablecoins is steadily growing: USDT decreased from $145.1 billion last week to $144.7 billion, with a decrease of 0.27%. USDC increased from $42.1 billion last week to $42.9 billion, with an increase of 1.91%. It can be seen that although the market is in a downward trend this week, USDC, which is mainly based in the US market, still showed growth, indicating that the purchasing power in the market is still maintaining a continuous influx 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 rise in the value of cryptocurrency assets. Returning to Defi will be a very good choice.

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

in-depth analysis

Pump driving force:

The core driving factors of this round of pump can be summarized in the following transmission path: Due to the recent downtrend in the market, the APY of various DeFi protocols has decreased, while stablecoin yield projects have increased their yields through token/point rewards, making the APY of machine gun pool projects have a clear advantage from the overall market perspective. Specifically:

• Market Environment: Although it is in a bull market cycle, the recent market is in a downward trend, leading to a significant decrease in the market's base interest rate.

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

• Yield side: The yield from stablecoin yield projects has expanded compared to other projects, thus attracting more users to participate.

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

Potential risks:

Due to the recent trend of the market continuously rising, market investors are paying more attention to yields and borrowing leverage, while neglecting the risks of a downturn. Additionally, this week, due to the Christmas holiday, there has been a sharp decline in market liquidity.