Market Overview
Overall Market Situation
The cryptocurrency market showed a clear upward trend this week, with the sentiment index rising from 11% to 35%, still in the panic zone but significantly improved. The market capitalization of stablecoins continued to grow (USDT reached 142 billion, USDC reached 46.5 billion), indicating that institutional capital is still entering the market; the market rebound was mainly driven by two factors: one is that the US CPI data met expectations, and the other is the market's optimistic expectation of relaxed crypto regulation after a potential Trump victory. Altcoins generally outperformed the market, with DeFi and AI-related tokens seeing significant gains, indicating a trend of capital shifting from Bitcoin to small-cap tokens.
DeFi Ecosystem Development
The DeFi sector's TVL grew slightly to $53.5 billion, an increase of about 1% month-over-month. It is worth noting that DeFAI, as a combination of DeFi and AI, saw its market capitalization surge from $600 million to $3.2 billion in a week, indicating the market's strong pursuit of innovative DeFi applications.
AI Sector Development
The AI Agent sector has continued its strong development since the end of last year, moving from simply trading AI tokens to deeper application scenario development. The rise of DeFAI marks the entry of AI into the 2.0 stage in the crypto field, mainly manifested in four directions: user-friendly AI interfaces, investment portfolio management, infrastructure building, and market analysis and forecasting. The development paths of leading projects like Griffain, Anon, and AXIBT show that the market is transitioning from the concept verification stage to the practical application stage.
Meme Coin Trends
The Meme coin sector performed relatively flat this week, with market attention significantly declining from the high point in the fourth quarter of last year. This indicates that investors' risk appetite is shifting from purely speculative Meme tokens to projects with real application scenarios. However, with the intensification of Trump-related topics, the market may see a new wave of Meme coin speculation centered on political themes.
Public Chain Performance Analysis
Layer 1 public chains overall showed a stable upward trend, but the gains were less than those of the DeFi and AI sectors. Among the mainstream public chains, those with advantages in AI and DeFi ecosystems performed better, reflecting that the value of underlying public chains is increasingly dependent on the prosperity of their upper-layer application ecosystems. It is worth noting that public chains supporting AI computing are beginning to attract market attention, indicating that a new round of public chain competition may revolve around AI computing capabilities.
Future Market Outlook
In the short term, the market will be affected by the Federal Reserve's January meeting and Trump's inauguration, and volatility is expected to increase; it is suggested that investors focus on DeFAI projects with actual application scenarios when selecting, and avoid chasing pure concept speculation; in DeFi investment, investors can pay attention to the yield opportunities of the Vault projects, but need to strictly control the leverage risk; in terms of timing, it is recommended to observe the policy changes brought about by Trump's inauguration in the short term, avoid blindly chasing highs, and ensure the safety of the investment portfolio.
Market Sentiment Index Analysis
The market sentiment index fell from 11% last week to 35%, still in the panic zone but with a rebound.
Altcoins outperformed the benchmark index this week, with most tokens gaining more than the overall market. This was mainly due to the CPI data this week and the optimistic market sentiment brought about by the expected relaxation of Crypto market regulation after Trump's inauguration next week, leading to a rise in market prices. Given the current market structure, Altcoins are expected to move in sync with the benchmark index in the short term.
Overall Market Trend Overview
· The cryptocurrency market was in an upward trend this week, with the sentiment index still in the panic zone.
· Crypto projects related to DeFi performed better than other sectors, indicating that the market continues to focus on improving basic yields.
· Projects related to DeFAI received high attention this week, indicating that investors are actively looking for the next market breakthrough.
Hot Sectors
DeFAI
This week, the overall market was in a fluctuating upward trend, with all sectors in an upward state. Due to the large decline in the AI sector last week, the rebound this week was also very strong. And the current focus of the AI sector is shifting from the issuance asset model of AI Meme to the model of combining AI and DeFi, that is, DeFAI. As DeFAI has just emerged in the market, and it combines the two sectors with the greatest development potential in the Crypto industry - AI and the sector with the most concentrated capital - DeFi, the attention on DeFAI in the near future is the highest.
This week, DeFAI became the focus of market attention, with its market capitalization rising from $600 million last week to $3.2 billion, an increase of more than 4 times in one week. It can be seen that DeFAI is currently being pursued by the market. DeFAI projects can be divided into four categories: abstraction/user-friendly AI, yield optimization and investment portfolio management, DeFAI infrastructure or platforms, and market analysis and forecasting. DeFAI is still in an early stage, and most DeFAI projects are only focused on the directions of abstraction/user-friendly AI and market analysis and forecasting, with the most representative projects being Griffain, Anon, and AXIBT. Although DeFAI has grown rapidly in the near term and has gained a lot of market attention, the current applications of DeFAI are still in the concept verification stage, and most functions have not been realized, so in the upcoming investment process, we should not blindly follow the trend, but pay more attention to the landing of DeFAI projects in various fields and be aware of the risks of market speculation.
Top 5 DeFAI Projects by Market Cap:
DeFi Sector
TVL Growth Ranking
Top 5 projects by TVL growth in the past week (excluding projects with TVL less than $30 million), data source: Defilama
Folks Finance (Unissued): (Recommendation: 3 stars)
· Project Introduction: Folks Finance is a decentralized finance (DeFi) platform primarily built on the Algorand blockchain. It provides a suite of permissionless DeFi tools including lending, borrowing, staking, and trading.
· Latest Developments: This week, Folks Finance has focused on two main directions: ecosystem cooperation and community incentives. On the one hand, it has reached a cooperation with DeBank, enabling users to monitor their xChain accounts on the DeBank platform, and launched social task activities. On the other hand, it has continued to deepen its cooperation with Algorand, focusing on promoting the gALGO liquidity staking governance mechanism, and launching a governance incentive plan with up to 4x rewards, as well as social task activities in collaboration with the Galxe platform (January 14 to February 15).
Beets (Unissued): (Recommendation: 3 stars)
· Project Introduction: Beets is a liquidity staking token hub based on the Sonic chain, supporting users to stake into liquidity pools focused on LST.
· Latest Developments: This week, Beets' Liquid Staked S tokens (stS) on the Sonic platform have exceeded 88.99 million in less than a month, surpassing the highest record of FTM on Fantom in nearly three years. Meanwhile, Beets is actively expanding its ecosystem cooperation, partnering with PaintSwap and introducing SolvProtocol, launching the scUSDC|USDC liquidity pool and providing 6x points and about $165,000 in stS token rewards.
AlphaFi (ALPHA): (Recommendation: 3 stars)
· Project Introduction: AlphaFi is an automated yield optimization platform based on the SUI blockchain, designed to simplify digital asset management. Through smart strategies and automated operations, users can maximize asset returns without frequent manual operations.
· Latest Developments: This week, AlphaFi has focused mainly on technical optimization and ecosystem building: At the technical level, it has launched an optimized liquidity solution, including optimized range, active rebalancing, and automatic compound reward functions, contributing about 10% of the trading volume on the Sui chain with its liquidity staking (LST) product; In terms of ecosystem building, it has promoted DeFi development through deep integration with the Sui ecosystem, and has shown strong community participation (close to a 1:1 ratio of followers to stakers), and revealed that about $1.8 million in protocol revenue will be shared with the community through ALPHA token airdrops.
Echelon Market (not yet launched): (Recommendation: 2 stars)
· Project Introduction: Echelon Market is a decentralized finance market project built on the Move language. Users can borrow and lend assets indirectly through non-custodial pools and earn interest. In addition, Echelon Market also provides leveraged trading services for users.
· Latest Developments: This week, Echelon Market has mainly focused on ecosystem building and community development: The Echelon project team officially announced the upcoming launch and is actively recruiting hardcore software engineers to develop comprehensive DeFi applications. In terms of community building, Echelon organized in-depth discussions with GlenMoves and redactedrain, discussing the project roadmap and conducting community Q&A. Meanwhile, the project announced annualized yields of 12.88% for USDC, 11.39% for USDT, and 8.76% for WETH based on lending returns and APT incentives, in order to attract more on-chain user participation.
Astherus (not yet launched): (Recommendation: 3 stars)
· Project Introduction: Astherus is an innovative multi-asset liquidity hub, aiming to maximize the real yield of crypto assets by enhancing their utility. Astherus has also launched AstherusEx and AstherusEarn. AstherusEx is a decentralized perpetual contract exchange that supports derivative trading of mainstream assets, while AstherusEarn is a strategy yield product that allows users to stake assets to earn yields.
· Latest Developments: This week, Astherus launched the USDF stablecoin (supporting 1:1 USDT redemption and free minting), with its TVL quickly exceeding $100 million. Astherus' 24-hour trading volume reached $1.2 billion, making it the second largest perpetual contract trading platform in the market. It has deepened cooperation with the BNB Chain to launch the asBNB minting function, and partnered with Kernel DAO. Astherus has also introduced the new Rh Points system to incentivize user participation and adjusted the Au multiplier of ALP.
In summary, we can see that the projects with rapid TVL growth this week are mainly concentrated in the yield farming sector.
Overall Sector Performance
· Liquidity is gradually increasing: The arbitrage rate of on-chain DeFi projects is constantly increasing due to the rising value of crypto assets, and returning to DeFi will be a very good choice.
· Capital Situation: The TVL of DeFi projects has risen from $53 billion last week to $53.5 billion now, an increase of 0.94%, ending the negative growth in the TVL of various DeFi tracks last week. This is mainly due to the overall upward trend in the market after the downward needle on Monday, especially after the release of the US CPI on Wednesday, which led to a general rise in the market, attracting capital to re-participate in DeFi projects. The market is also generally optimistic about the inauguration of former President Trump next Monday, so funds have flocked to the DeFi industry, driving the TVL of the DeFi market to rise.
Performance of Other Tracks
Public Chains
Top 5 public chain TVL growth in the past week (excluding public chains with smaller TVL), data source: Defilama
Sonic: This week, Sonic launched DeFi applications supporting USDC, USDT, ETH and other cryptocurrencies, and innovatively introduced real-time deposit functionality, allowing users to avoid the constraints of pre-deposit and indefinite lock-up. It also collaborated with RedotPay to develop a global payment solution based on $S and stablecoins, and received approval from the Uniswap DAO to provide a total of $750,000 ($250,000 in UNI + $500,000 in $S) in liquidity mining rewards. This week, the $S token was successfully listed on Bybit, and the first NFT series "Umans on a Sonic Trip" created by WorldofUmans was launched, followed by the release of a new points dashboard, and the upcoming integration of Lombard Finance's $LBTC.
Hyperliquid: This week, Hyperliquid successfully launched the SOLV token, the first innovative token in Crypto to achieve "Day 1 three-way synchronization" (simultaneous listing on centralized exchanges, Hyperliquid spot market, and multi-chain deployment). SOLV not only launched simultaneously on the Hyperliquid L1 and BNB Chain, but also plans to achieve seamless cross-chain asset connectivity on the upcoming HyperEVM. Hyperliquid has also reached a strategic partnership with the NFT project Azuki's endorsed open anime universe token ANIME, where HYPE stakers will receive ANIME token TGE airdrop benefits.
Algorand: This week, Algorand completed the deployment of the important 4.0 version upgrade, and launched the NodeKit tool to simplify node operation, preparing for the upcoming staking reward mechanism. Algorand has also reached strategic partnerships with Mastercard and PeraAlgoWallet to promote the implementation of instant settlement functionality, and collaborated with DeFi platforms such as Tinyman and Pact.Fi to enrich the financial application scenarios in the ecosystem. Algorand also announced recent progress in real-world applications, processing over 112 million transactions through the TravelX platform by 2024.
BSquared: This week, BSquared has made significant progress in technology and ecosystem building: As a Bitcoin Layer-2 solution, the platform has successfully processed over 101 million transactions, and further strengthened the BTCFi ecosystem through strategic cooperation with Segment Finance. Notably, B² is actively promoting Bitcoin's transformation into an AI innovation center, supporting the development of AI-driven intelligent agents, while in the DeFi field, it provides users with higher yields through innovative token economics and optimized liquidity solutions.
Mode: This week, Mode has shown strong development momentum in the DeFAI field: First, it launched the "Agentic Economy" Season 4 plan, providing up to 2 million OP in ecosystem incentives, and introduced the Agentic Staking mechanism; In terms of technical layout, it announced the complete DeFAI technology stack development plan for Mode 2025, and further improved the ecological infrastructure through cooperation with Matcha; Meanwhile, to promote ecosystem prosperity, Mode has launched a $100,000 AI agent founder school program to attract developer participation.
Overview of the Gainers Ranking
Top 5 token price gainers in the past week (excluding meme coins and tokens with small trading volume), data source: Coinmarketcap
ANON: This week, Hey Anon has been working on technical innovation and governance structure promotion: It released the AUTOMATE TypeScript framework for DeFAI, which not only simplifies the integration process of DeFi protocols, but also successfully connected with the Arbitrum ecosystem. In terms of governance, Hey Anon initiated the first DAO governance proposal, and realized the circulation of the $ANON token on multiple chains including Base, Arbitrum and Ethereum, laying a solid foundation for building a more comprehensive DeFAI ecosystem.
BUZZ: Hive AI won first place at the Solana AI Hackathon this week, demonstrating its technical capabilities. Hive AI also launched several important feature updates, including an AI-native token analysis dashboard, a liquidity proxy tool, and an innovative Worker Bees automation proxy system. The platform also added support for Apple Pay and Google Pay to enhance the user experience. Hive AI has achieved a milestone of over 10,000 new users in just 10 days and continues to optimize product features based on feedback from the Discord community, including calculating the USD value of token inputs and an interactive transfer tool.
CGPT: This week, ChainGPT made important breakthroughs in ecosystem expansion and technological innovation. In terms of ecosystem expansion, the $CGPT token was successfully listed on Binance's spot trading, as well as on KuCoin and Bybit for perpetual contract trading, significantly improving market liquidity. In terms of technological innovation, ChainGPT launched a smart contract audit tool and a new AI agent system, and collaborated with ChainAware to launch an anti-fraud solution, further enhancing platform security. ChainGPT was also selected as the top AI project on the BNB Chain and launched a monthly reward program to promote community engagement.
ARC: This week, AI Rig Complex focused on technical collaboration and ecosystem expansion, reaching strategic partnerships with three important partners: collaborating with AbstractChain to introduce EVM compatibility into the Rust-based AI framework "Rig"; integrating with Shuttle_dev to enhance the developer experience; and partnering with CryptoEternal AI to promote the adoption of decentralized AI.
GRIFFAIN: This week, GRIFFAIN focused on the release of three key features: first, it collaborated with Metaplex to launch the "Agent GM" feature, simplifying the minting process for digital assets; secondly, it released the "Agent Moby" whale monitoring assistant, which integrates AssetDash and WhaleWatchAlert to enhance market monitoring capabilities; finally, it launched the "Agent Backpack" feature, enabling integration with the Backpack Exchange platform. GRIFFAIN continues to improve its ecosystem through strategic partnerships with well-known projects.
Meme Token Gainers
This week, the market was in a wide range of fluctuations, and after Tuesday, the entire market entered a rebound mode. Meme projects, especially those related to AI, saw the largest rebound, leading to a "wealth effect" and attracting increased attention and capital to AI Meme projects.
Social Media Hotspots
Based on the top five daily growth on LunarCrush and the top five AI scores on Scopechat, the statistical data for the week of 1.11-1.17 shows that Layer 1 projects were the most discussed topic, with the following tokens listed (excluding meme coins and tokens with low trading volume):
The data analysis shows that Layer 1 projects received the highest social media attention this week. After the CPI data was released on Wednesday, the market entered a rebound trend. As Altcoin projects in various sectors had previously experienced significant declines, they saw decent gains in this rebound, as the rise in token prices drove an increase in DeFi project APYs, attracting more on-chain users to participate. Additionally, the underlying assets of most DeFi projects are tokens from various Layer 1 projects, leading the market to shift its attention and capital back to public chain projects.
Overall Market Sector Overview
Based on weekly returns, the PayFi sector performed the best, while the RWA sector performed the worst.
· PayFi Sector: In the PayFi sector, XRP, BCH, and XLM account for a relatively large proportion, at 83.37%, 3.96%, and 6.92% respectively, totaling 94.74%. This week, XRP, BCH, and XLM performed very strongly, increasing by 44.58%, 8.16%, and 23.86% respectively. The rapid rise of XRP was due to Trump's statement that he would prioritize XRP and SOL as strategic reserves.
· RWA Sector: In the RWA sector, OM, ONDO, and MKR account for a relatively large proportion, totaling 87.85%. This week, their declines were -2.98%, -1.19%, and -6.93% respectively, which were larger than the declines of projects in other sectors, resulting in the RWA sector's worst performance this week.
Upcoming Crypto Events Next Week
Monday (January 20): SEC Chair Gary Gensler steps down; Trump sworn in as US President; CFTC Chair Rostin Behnam steps down; Web3Hub Davos 2025
Wednesday (January 22): WAGMI 2025
Thursday (January 23): US Weekly Initial Jobless Claims
Outlook for Next Week
Macroeconomic Factors
Next week, there are not many macroeconomic data releases, and the main influencing factor for the market is Trump's inauguration as US President on Monday, as well as the departures of SEC Chair Gary Gensler and CFTC Chair Rostin Behnam on the same day. Currently, it is highly likely that Trump will mention cryptocurrency policies or issue new cryptocurrency policy legislation during his inauguration speech. If the market's expectations are met, it will greatly boost market sentiment. However, if he does not mention the cryptocurrency industry, it may dampen market sentiment and lead to a decline. Therefore, market volatility is expected to increase next week.
Sector Rotation Trends
Although the DeFi sector's market sentiment is currently poor after the recent market fluctuations, most investors still expect the market to generally rise in the first quarter of this year after Trump takes office. Therefore, most investors are unwilling to sell their tokens and are instead participating in yield farming projects to increase their returns.
The AI Agent sector has received sustained attention from the market, with a market size of $15.9 billion, an increase of nearly 16.65% from the previous week. The market's attention is gradually shifting from the AI sector to DeFAI. Investors generally believe that AI is currently the sector with the greatest development potential in the crypto market, and if AI is combined with DeFi, it will aggregate the capital and traffic in the crypto market, with a high probability of creating a highly competitive new sector.
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