Market Overview
Overall Market Situation
This week, the cryptocurrency market has been in a rapid downward trend, with the market sentiment index falling from 33% to 11%. The market capitalization of stablecoins has basically stopped growing (USDT reached 142 billion, USDC reached 55.9 billion, with changes of 0.02% and -0.53% respectively), indicating that as the market experiences a severe decline, institutional capital has stopped entering and started to exit; the panic in the market is mainly due to the hacking of Bybit exchange, which resulted in the loss of $1.5 billion in assets, as well as Trump's aggressive tariff policy, which has increased concerns about inflation and reduced the possibility of interest rate cuts by the Federal Reserve, heightening concerns about the US entering an economic recession, thereby having a strong impact on market sentiment, causing the overall market sentiment to fall into extreme panic, and Altcoins generally underperforming the benchmark index.
Forecast Targets for Next Week
Bullish Targets: LTC, S, SOSO, BERA
LTC: This week, LTC bucked the trend and rose, outperforming the overall market which was in decline. This is mainly due to the market's increased expectations for the approval of the LTC ETF. This week, Canary Capital has proposed a spot LTC ETF that has been listed on the Depository Trust and Clearing Corporation (DTCC) system, and LTC has received 87% approval for staking on Polymarkt. The market currently has high expectations for the approval of the LTC spot ETF, so there will be repeated speculation on the LTC spot ETF event before it is officially approved.
S: Sonic has recently started to enter the DeFi industry, attracting a large number of on-chain users and funds to Sonic through the high APY of its on-chain DeFi projects. On the Sonic chain, the highest APY of the main liquidity staking projects Beets and Origin can reach 32.22% and 123% respectively, and the average interest rate for users borrowing S tokens on the Sonic chain's lending protocols is 10.21%, allowing users to obtain a return of over 20%. In addition, the recent surge in demand for the S token due to the hot Sonic chain has led to an increase in the price of the S token, even in the current downward market, users can still obtain a risk-free return of over 20% by borrowing tokens, which will attract a large number of users to participate, further increasing the market demand for the S token and driving the price of the S token to spiral upwards.
SOSO: The SoSoValue project team is able to constantly adjust its future development direction based on the market trend. SoSoValue originally positioned itself as an AI-powered one-stop investment service platform, but after the AI agent market declined, the market's attention and capital began to shift to DeFi projects. SoSoValue then repositioned itself as a financial service center, hiding its AI technology in the product but focusing on promoting its ability to provide high APY. Recently, SoSoValue has launched a second season of mining activities, where users can earn SOSO tokens by holding or staking SSI index tokens, allowing users to obtain an APY of up to 42% through staking rewards and additional airdrops, further increasing the bullish expectations for the SOSO token.
BERA: This week, the overall market was in a downward trend, and BERA was also affected by the market and experienced a decline at first. However, the Berachain project team quickly adjusted the staking yield of the on-chain LSD project, with the main LSD project Infrared Finance on the Berachain chain offering a maximum APY of 123% for WBERA, and the lending rate for borrowing BERA on the chain reaching 23.68%, allowing users participating in arbitrage to earn a 100% risk-free annualized return, quickly reversing the downward trend and turning it into an upward one. The strategy adopted by the Berachain project team is similar to that of Sonic, using high APY to attract on-chain users and capital, thereby realizing the process of staking and locking -> liquidity release -> DeFi empowerment -> token appreciation, and using the high APY to increase the market demand for the chain's main token BERA, thereby promoting the price increase of the BERA token.
Bearish Targets: ETH, SOL, ADA, AI, TKO, RUNE
ETH: This week, Bybit was hacked and lost 491,000 ETH. Although Bybit has now fully replenished the stolen ETH through purchases and redemptions, the purchasing power generated has not been reflected in the price, indicating that investors still have FUD sentiment towards ETH. After the Bybit hack, Bybit's investigation report clearly stated that the theft was mainly due to a vulnerability in the safe, not a problem with the exchange's infrastructure, which has led the market to have greater doubts about the safe technology, as well as the security of most projects in the Ethereum ecosystem that use safe technology. In addition, Ethereum's Pectra upgrade will be launched on the test network this weekend, and according to past practice, there will usually be a pump before the technical upgrade of the project, and a pullback after the good news is realized. Since the Pectra upgrade has not injected much energy into the ETH price, it is highly likely that the ETH price will decline after the upgrade is realized.
SOL: This week, SOL has experienced a significant decline following the overall market. This is mainly due to the recent retreat of the Meme coin craze, and Solana, as the public chain with the highest Meme coin returns, has also been affected by various FUD voices in the market, causing the on-chain capital of Solana to start fleeing, with its TVL dropping from $12.1 billion to $7.3 billion, a 39.66% decline. At the same time, the on-chain liquidity staking yield has dropped from 10.29% to 7.26%, and the on-chain transaction volume has dropped from $35.5 billion to $2.4 billion, a 93.23% decline, indicating that Solana's on-chain ecosystem is close to collapse. In addition, SOL will face the unlocking of 11.2 million SOL on March 1, which are held by institutions and may continue to be sold, exacerbating the panic sentiment of market investors towards SOL.
ADA: This week, the TVL of the Cardano chain has experienced a large-scale decline, dropping by 26.88% to $308 million, a 56.06% decline from its peak of $701 million. The TVL of all ecosystem projects on the chain has also declined by more than 10%, indicating that on-chain capital is rapidly flowing out of the Cardano ecosystem, proving that the market currently has FUD sentiment towards the Cardano ecosystem. The trading volume of Cardano's on-chain DEX has also dropped by more than 68%, and the borrowing rate for ADA tokens is currently only 3.29%, indicating that there is almost no one participating in lending on the Cardano chain. Therefore, if the on-chain capital of Cardano continues to flow out, ADA is expected to continue to decline next week.
AI: Sleepless AI is a Gamefi project based on AI, and the AI and Gamefi sectors occupied by Sleepless AI have seen the deepest pullback in this downturn, as investors have lost interest in the Play to Earn model of Gamefi, with user participation declining and almost no new capital inflow. In addition, AI projects are generally considered to be overvalued at the current stage, and the AI sector has been in a significant downward adjustment. Furthermore, AI will unlock 17.27 million tokens next week, accounting for 1.73% of the current circulating supply, and the large unlocking ratio combined with the poor performance of the sector recently is expected to lead to a decline in the short term after the token unlocking.
TKO: Tokocrypto is the largest cryptocurrency exchange in Southeast Asia, and the recent Bybit hacking incident has had a negative impact on the performance of tokens of various centralized exchanges. In addition, TKO will unlock 100 million tokens, accounting for 2.02% of the current circulating supply. The large unlocking ratio is expected to lead to a decline in the token price after the unlocking.
RUNE: THORChain is a decentralized cross-chain AMM trading protocol. This week, it experienced a significant counter-trend rally from Monday to Wednesday, mainly because the hacker who stole from Bybit kept transferring the stolen ETH into THORChain and conducting money laundering transactions, causing a significant increase in THORChain's trading volume and transaction fees. This led to THORChain's price rising against the market downturn. After the market exposed the hacker's use of THORChain for money laundering, THORChain's developer Pluto announced his resignation. It is expected that next week, as trading volume decreases and the market is affected by FUD over the alleged money laundering, THORChain's token price will continue to decline.
Market Sentiment Index Analysis
The market sentiment index has decreased from 33% last week to 11%, overall in the near-extreme fear zone.
Hot Tracks
Sonic
· Current Situation
In the past few weeks, the TVL of the Sonic chain has maintained a high-speed growth trend, and this week, the TVL of most chains on the chain is in a downward trend, Sonic is the only one that has maintained a 10% growth rate among the chains with a TVL of over $50 million, with a growth rate of 10.32% this week, and the TVL on the chain has grown to $6.83 billion. This shows that even in the extremely bearish market, its on-chain ecosystem is still experiencing continuous capital inflows, and its token S also rose by 7.63% this week. Although the increase is not high, the fact that it can rise in the context of a market crash also indicates the market's recognition of it.
· Reasons for the Heat
Sonic has recently shifted the focus of its project from GameFi to DeFi, adopting a high-APY strategy to attract on-chain users. In its main liquidity projects on the chain, it can provide users with up to 123% APY, and around 10% lending rates for borrowers, allowing users to achieve over 100% risk-free annualized returns through arbitrage. In the current downward market, such high APYs have great appeal to on-chain users, prompting them to participate by buying or borrowing tokens, increasing the demand for the S token and leading to its relatively good performance compared to most other tokens.
· Future Outlook
We can see from the reasons behind Sonic's recent heat that it is mainly due to the increased annualized returns of the LSD projects in the Sonic ecosystem, which have attracted more on-chain users to participate in arbitrage activities. So we can see that the path for an ecosystem to develop rapidly is to achieve efficient driving of its economic flywheel. The project team has shifted its focus to the DeFi track, realizing asset empowerment. In this, asset pledging and liquidity are the key, allowing assets to generate compound returns in DEX, lending, and asset management. The economic flywheel of the on-chain ecosystem must be formed through: pledging + liquidity + DeFi empowerment + user growth. The core driving force is the dual-wheel drive of on-chain token pledging and liquidity release, allowing it to generate compound returns in scenarios such as DEX, lending, and asset management, realizing "pledging is productivity". After on-chain users are attracted by high APYs, a positive feedback loop of pledging and locking -> liquidity release -> DeFi empowerment -> token appreciation -> user inflow -> re-pledging -> developer aggregation must be formed. Otherwise, when the capital of new entrants is insufficient to cover the selling pressure of arbitrageurs, the token price will decline, and the returns of various projects will also decrease, causing the arbitrageurs to exit. This would be a huge blow to the ecosystem. So in the future, we need to continue to pay attention to the APYs of DeFi projects on the Sonic chain to judge whether it still has the power to develop.
However, it should be noted that although Sonic's TVL was the fastest growing among all chains over $1 billion this week, its TVL did not rise steadily, but experienced a surge and then a pullback.
Berachain
· Current Situation
This week, the entire market was in a rapid downward trend, and the top 10 projects by TVL, except for Berachain, were all in a state of decline. Although Berachain's TVL growth this week was only 4.66%, it is still not easy to maintain positive growth in the current environment. Its TVL reached $31.94 billion, ranking sixth among all public chain TVLs, surpassing the Base chain. Its token BERA also maintained an upward trend this week, with an increase of 7.26%, in a strong position among Altcoins.
· Reasons for the Heat
This week, the growth rates of the leading DEX, Lending, and LSD projects in the Berachain ecosystem have slowed down, and Berachain's TVL even declined in the first half of the week. However, due to the fact that Berachain's main LSD project Infrared Finance has set the highest APY of WBERA at 121%, and the emerging LSD project Stride has set the APY at 190.12%, as well as the lending rate for borrowing BERA on Berachain reaching 23.68%, allowing arbitrage users to earn a 100% risk-free annualized return, this quickly curbed the downward trend and turned it into an upward trend.
· Future Outlook
Berachain's continued heat this week is mainly due to the increased APYs of its on-chain DeFi projects, which have maintained a relatively strong attraction to on-chain users, causing a large amount of on-chain capital to flow into Berachain. Berachain's development path is similar to Sonic's, so it is also facing similar problems. At the current stage, Berachain has realized the process of pledging and locking -> liquidity release -> DeFi empowerment -> token appreciation, but it has not shown outstanding on-chain projects in the user inflow -> re-pledging -> developer aggregation process. Therefore, although this high-interest rate model can promote the rapid development of Berachain's on-chain ecosystem in the short term and also drive the rapid rise of its project token BERA, it will inevitably face increasing selling pressure in the future. When the capital of new entrants is insufficient to cover the selling pressure of arbitrageurs, the BERA token price will decline, and the returns of various projects will also decrease, causing the arbitrageurs to exit. Therefore, in the future, more attention should be paid to whether new star projects will appear on the Berachain chain, and whether the interest rates provided by its LSD projects will drop significantly.
Overall Situation of Market Themes
Based on weekly returns, the Sociafi track performed the best, while the PayFi track performed the worst.
· Sociafi Track: In the Sociafi track, TON and CHZ account for a relatively large proportion, totaling 95.17%, and their declines this week were -4.86% and -4.79% respectively, which, although in a downward trend, were still better than the performance of other Altcoins, leading to the best index performance of the entire Sociafi track.
· PayFi Track: In the PayFi track, XRP, LTC, and XLM account for a relatively large proportion, totaling 94.62%, and their declines this week were -19.23%, -1.21%, and -16.96% respectively, causing the PayFi track to perform the worst.
Preview of Major Crypto Events Next Week
Monday (March 3): US February ISM Manufacturing PMI
Wednesday (March 5): US February ADP Employment; Pectra network upgrade plan launched on Ethereum testnet
Friday (March 7): US February Nonfarm Payrolls; US February Unemployment Rate
Summary
This week, the cryptocurrency market experienced a significant decline, with the market sentiment index plummeting, indicating widespread investor concerns. However, some projects like LTC, Sonic, SoSoValue, and Berachain have attracted users through high-APY strategies. In the long run, market stability and the emergence of new projects will be key factors. Investors are advised to closely monitor market dynamics and operate cautiously.
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