Market Weekly Report: The market is sluggish during the double festival period, and Q1 of next year may welcome a rise market.

Market Overview

This week, the cryptocurrency market is experiencing an overall downward trend due to the influence of the Christmas holiday. The market sentiment index has slightly risen from 7% to 10%, but it remains in the extreme fear zone. It is noteworthy that despite the overall market weakness, USDC, which is primarily focused on the US market, has still achieved a growth of 1.91%, indicating that institutional funds continue to enter the market, injecting some confidence.

The DeFi sector saw a slight decline in TVL this week, down 0.37% to $52.7 billion, but projects like the machine gun pool and other stablecoin yield projects performed well. The overall supply of stablecoins continues to grow, indicating that despite the market pullback, 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 significant market attention, with a total scale reaching 10.9 billion USD. In particular, the aipool model that integrates TEE technology has become a new focal point in the market and is expected to become a new type of asset issuance method following "inscription". This shows the development trend of the deep integration of AI and blockchain technology.

Due to the impact of the holiday and the overall market decline, the performance of the Meme coin sector has been sluggish this week, with a noticeable decrease in investor participation and capital inflow, while market interest has temporarily shifted to other sectors, reflecting 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 development.

Looking ahead, the market is expected to continue its sluggish trend during the New Year's holiday, and it is recommended that investors maintain a defensive allocation, increasing the proportion of top assets while moderately participating in high-yield machine gun pool projects. In the long term, the market generally anticipates a rise in the first quarter of 2025, with AI Agent and DeFi machine gun pool projects worthy of special attention.

Market Sentiment Index Analysis

The market sentiment index has risen from 7% last week to 10%, remaining in the extreme fear zone. Altcoins have performed worse than the benchmark index this week, showing a significant downward trend. The Christmas holiday has led to a sharp decline in liquidity, increasing market price volatility, making sharp 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 an independent market trend. When Altcoins are in the extreme fear zone, the market is often at a stage bottom, and an upward reversal could 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 cryptocurrency projects have shown outstanding performance, indicating that the market continues to focus on enhancing base yields.

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

Hot Tracks

AI Agent

This week, the overall market is in a downward trend, with various sectors also in a state of decline. Although most token prices in the AI Agent sector have also been on a downward trend this week, it has generated the highest level of discussion in the market. The most discussed topic this week is the development of the aipool model, which combines AI Agent and TEE, and its impact on the future of Crypto and Defi.

One of the boosters for the periodic major rises in the crypto market is the emergence of new asset issuance methods. For example, previous asset issuance methods such as ICOs, IEOs, INOs, IDOs, and inscription have rapidly promoted the development of the market and the increase in crypto market prices. Against the backdrop of 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 "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, there will be a small wave of asset issuance frenzy brought about by the aipool model, so we should pay close attention to aipool-type projects.

DeFi track

TVL rise ranking

The top 5 projects by TVL increase in the market over the past week (excluding projects with a smaller TVL, the standard is 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 value of stablecoins is steadily increasing: USDT has decreased slightly by 0.27%, while USDC has risen by 1.91%. The growth of USDC, which is primarily focused on the US market, indicates that main market funds are continuously entering.

• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets continue to decline with interest rate cuts, while the arbitrage rates of on-chain DeFi projects increase due to the rise in the value of cryptocurrency assets. Returning to DeFi will be a good choice.

• Funding situation: The TVL of Defi projects slightly decreased by 0.37% from $52.9 billion to $52.7 billion. This was mainly influenced by the Christmas holiday in Western markets, with trading volumes of various tokens and on-chain activities both declining. Next week marks the New Year's holiday, and no significant changes are anticipated. It is recommended to focus on the overall TVL changes in the market in January and monitor whether the downward trend continues.

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%

Overview of Rise Rankings

Top 5 tokens by market rise in the past week:

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 Ranking

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, the Meme projects have been significantly affected by the overall market decline. The Christmas holiday has led to a decrease in users participating in trading, resulting in capital withdrawal from the market, and the number of investors participating in Meme coin projects has noticeably decreased. Currently, market attention and funds are not focused on the Meme coin sector.

social media hot topics

According to data analysis, the most关注度 this week is on L1s projects. During the Christmas holiday period, market liquidity has significantly declined, with ordinary investors reducing on-chain investment activities accompanied by sell-offs, resulting in a substantial market decline, while the decline in various public chains is relatively small. When the market experiences a widespread drop, various public chains often perform better than other sectors. Apart from buying BTC and ETH as a hedge, most of the funds are still invested in various public chains, anticipating that once the decline ends, public chains will rise ahead of other projects.

Overall Overview of Market Themes

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

• SocialFi sector: The main player TON accounts for 91.07%, and has risen against the trend by 6.3% this week, leading the entire sector's best performance.

• RWA track: The main tokens OM, ONDO, and MKR have decreased by 10.76%, 19.86%, and 8.28% respectively, with significant declines, resulting in the worst performance of this track this week.

Next Week Outlook

macroeconomic factors analysis

• Next week will enter the New Year's Day holiday, and there will be relatively few macroeconomic data releases.
• In past New Year's Day holidays, the purchasing power of the market, primarily led by the United States, usually continues the sluggishness seen during the Christmas period, and market volatility may increase.

sector rotation trend

• DeFi track: Investors generally expect the market may pump in Q1 next year, and most are unwilling to sell tokens, opting instead to participate in gun pool projects to increase 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 is widely discussed.

investment strategy recommendations

• Maintain a defensive allocation, increasing the proportion of top assets such as BTC and ETH to enhance hedging properties.
• You can moderately participate in high-yield machine gun pool DeFi projects.
• Maintain overall caution, strictly control positions, and manage risks effectively.