Crypto Market Weekly Report: The market is weak during the double festival period, and a pump may come in Q1 next year.

Market Overview

This week, the crypto market is showing a downward trend due to the effects of the Christmas holiday. Although the market sentiment index has slightly increased 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 in the US market, has still achieved a 1.91% rise, indicating that institutional funds continue to enter the market, injecting some confidence into it.

The DeFi sector's TVL slightly decreased by 0.37% this week to $52.7 billion, but projects like the machine gun pool and other stablecoin yield offerings performed 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 the machine gun pool are in high demand.

The AI Agent sector continues to receive significant 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 be a new asset issuance method following "inscription", demonstrating the deep integration trend of AI and blockchain technology.

Due to the impact of the holidays and the overall decline in the market, the Meme coin sector performed sluggishly this week, with a noticeable decrease in investor participation and capital inflow. The market's heat has temporarily shifted to other sectors, reflecting the high volatility characteristics of this sector.

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 ecosystem development.

Looking ahead, the market is expected to continue a sluggish trend during the New Year holiday, and investors are advised to maintain a defensive allocation and increase the proportion of top assets, while moderately participating in high-yield machine gun pool projects; in the long term, the market generally expects a rise in the first quarter of 2025, and AI Agent and DeFi machine gun pool projects are worth paying special attention to.

Market Sentiment Index Analysis

The market sentiment index has risen from 7% last week to 10%, still in the extreme fear zone. Altcoins have performed worse than the benchmark index this week, showing a significant downtrend. Due to the Christmas holiday, liquidity has sharply decreased, causing increased volatility in market prices, which makes sudden rises and falls more likely. Given the current market structure, it is expected that Altcoins will maintain synchronization with the benchmark index in the short term, with a low probability of independent trends.

When altcoins are in an extreme panic zone, the market is often at a stage bottom, and an upward reversal can happen at any time.

Overview of Overall Market Trends

The cryptocurrency market is in a downtrend this week, with the sentiment index still in extreme fear.

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

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

Hot Tracks

AI Agent

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

A booster for the periodic large rises 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 inscription have all rapidly 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 highly popular asset issuance method at this stage, and it is also a continuation of "money printing 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 see a small wave of asset issuance frenzy brought about by the aipool model. Therefore, we should focus on aipool type projects.

Top five AI Agent projects by market capitalization:

| Project Name | Market Cap ( million USD ) | Price Change | | --- | --- | --- | | Worldcoin | 22.04 | -2.07% | | Render | 20.55 | -2.30% | | Fetch.ai | 19.44 | -7.61% | | SingularityNET | 13.37 | -2.75% | | Ocean Protocol | 11.03 | -5.01% |

DeFi track

TVL rise ranking

The top 5 projects with the largest TVL rise in the market over the past week (excluding projects with smaller TVL, with a standard of over 30 million USD), data source: Defilama

| 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 (not 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 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 by integrating LayerZero and StarGate technologies, successfully transforming into an Omnichain project. Meanwhile, the OFT standard it adopted passed security audits from multiple institutions. Resolv performed exceptionally well in ecological development this week, attracting a second $100 million inflow, with an ecological growth rate of 84%. Its USDC Vault provides up to 36.36% APY 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): (Recommendation 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, multi-currency strategy. The project's core goal is to build the 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 the USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding its ecosystem. The sUSDX reached a TVL of 170 million USD through collaboration with Lista DAO. USDX Money also launched the X-Points incentive program, which includes content creation and angel plans, 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: the stablecoin USD0, the bond product USD0++, and the governance token USUAL.

Latest development: Recently, Usual secured a $10 million Series A financing led by a certain institution and partnered with the M^0 Foundation to launch a new product called UsualM. At the same time, it has become the largest USD0/USD0++ pool on a certain DEX. With Usual's TVL surpassing $1.5 billion, it ranks among the top five stablecoins globally. The DAO treasury has also doubled to $17 million, and the Usual project has launched staking rewards for USUALx with an APY of up to 18,000%, along with a community airdrop event.

Hashnote (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 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. Meanwhile, the project's CEO shared new strategies at the meeting, which garnered over 14,000 views, indicating 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 within a specified future period and trade the future yields generated by the asset in advance. The way Spectra works is 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, and introduced the Gauges and ncentivize pages in the Spectra App. At the same time, the multi-lock function for veSPECTRA holders has been optimized, allowing them to participate more efficiently in the Gauge voting mechanism. Additionally, Spectra has 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 rapidly increasing TVL are mainly concentrated in the stablecoin yield sector (machine gun pool).

Overall performance of the track

Stablecoin market capitalization steadily grows: USDT decreased from $145.1 billion last week to $144.7 billion, with a decline of 0.27%. USDC increased from $42.1 billion last week to $42.9 billion, with a rise of 1.91%. It can be seen that although the market is in a downward trend this week, USDC, which is primarily based in the U.S. market, still experienced growth, indicating that the purchasing power in the market continues to maintain a steady influx of funds.

Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets continue to decline 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 dropped 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 this week, the Western market, led by the US market, is in the Christmas holiday, resulting in a decline in both trading volume of various tokens and on-chain activities. Additionally, next week is 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 decreased. However, stablecoin yield projects have increased their yields through token/point rewards, making the APY of liquidity mining projects significantly advantageous from the overall market perspective. Specifically:

• Market Environment: Although it is in a bull market cycle, the recent market has been in a downtrend, causing the market's base interest rate to decline significantly.

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

• Earnings side: The yield of stablecoin earning projects has expanded compared to other projects, thus attracting more users to participate.

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

Potential Risks:

Due to the recent upward trend in the market, market investors are paying more attention to