BTC and ETH Weekly Overview
Market performance
The overall cryptocurrency market rebounded this week:
· Bitcoin: This week, Bitcoin showed an overall upward trend. After the Federal Reserve announced a 50BP rate cut, the interest rate dot plot subsequently released showed that the median Fed interest rate expectation at the end of 2024 was between 4.25% and 4.50%, which means that the next two interest rate meetings will reduce the rate by 50BP, and the rate cut exceeded market expectations. In his subsequent speech, Powell made it clear that the rate cut was not caused by the economic recession, the US economy is still strong, and the market also chose to believe that the rate cut was not caused by the economic recession but was a defensive and proactive rate cut, which triggered the market's optimism about future expectations. Investors who had previously chosen to wait and see have come out to buy assets, causing market prices to continue to rise.
· Ethereum: This week, Ethereum's performance was weaker than Bitcoin, and its rebound was weaker than the overall market. This was mainly because Vitalik spoke on behalf of Ethereum at the Token2049 conference. In his speech, Vitalik did not talk about Ethereum's future development path and substantive construction opinions, which caused the market to continue to be pessimistic about Ethereum's future, causing the ETH/BTC exchange rate to continue to fall. The market's pessimism about Ethereum has reached a high point recently, and funds have been transferred from the Ethereum chain to other public chains, resulting in a continued weakness in the price of Ethereum.
Key Events
The Federal Reserve cut interest rates by 50 basis points for the first time
On September 19, the Federal Reserve announced a 50 basis point rate cut, which started the process of rate cuts as scheduled. It can be seen from the interest rate dot plot released later that the Federal Reserve expects to cut interest rates by 100 basis points by the end of 2024, which means that it will choose to cut interest rates by 25 basis points in the two interest rate meetings in November and December. And the final value in 2026 is lower than the expected 3.1%. The market's concerns about the Fed's interest rate cut in response to the economic recession have been reduced, and confidence in the market outlook has gradually recovered.
Ethereum had no constructive opinions in the Tonken2049 meeting
At the crypto's annual Token2049 conference which opened this week, Vitalik gave a speech on behalf of Ethereum. In his speech, Vitalik did not talk about Ethereum's future development path and opinions on substantive construction, which caused the market to continue to be pessimistic about the future of Ethereum, causing the ETH/BTC exchange rate to continue to fall, reaching a new low since 2021.
Altcoin Overview of the Week
Overall performance
This week, the market sentiment index recovered quickly and has risen to 87%, a significant increase from 65.5% last week. As the Federal Reserve started to cut interest rates this week, the market sentiment was boosted, the prices of various tokens rebounded further, and the market sentiment turned from greed to extreme greed.
The Altcoin market continued to rebound this week following the market and the rebound was stronger than the market, mainly because before Thursday, the market predicted that the Fed would cut interest rates by 50 BP on Thursday because of the article published by Nick, the mouthpiece of the Federal Reserve. On Thursday, the Federal Reserve cut interest rates by 50 BP as scheduled. In the subsequent Powell speech and dot plot, the dovish performance was reflected, which triggered the market's good expectations for the subsequent trend. Some investors have returned to the market, and Ethereum has continued to be weak this week, and funds have continued to flow out and enter other ecosystems. Investors need to pay attention to the fact that the Altcoin sentiment is extremely greedy at this stage, and there are very high risks.
Overview of public chain TVL growth
The top 5 public chains with the highest TVL growth in the past week (excluding public chains with smaller TVL), data source: Defilama
Fantom: Fantom is a public chain compatible with EVM. By using the Opera mainnet and superimposing its own technological innovations, Fantom has become a high-performance public chain. After Fantom was renamed Sonic, it has been doing various activities on the chain to increase the participation of users on the chain. This week, Sonic officially launched Sonic Gateway, an official cross-chain bridge that eliminates all third-party and centralized risks, and is endorsed by Sonic to ensure the security of its project. Using Sonic Gateway enables users to complete the cross-chain between Sonic and the Ethereum chain within an hour. In addition, the Ethereum ecosystem is relatively weak recently, and problems have occurred within the ecosystem, causing some users on the chain to choose to leave Ethereum. Sonic, which is compatible with Ethereum, naturally becomes a better place for outgoing funds. In addition, Sonic conducts various activities on the chain every week to attract users on the chain, so Fantom's TVL growth rate has maintained a very high increase in recent times.
Manta: Manta is an Ethereum Layer2 that uses ZK, and mainly focuses on the GameFi track. Recently, the chain has been incubating and introducing various GameFi projects, and providing a certain amount of support to entrepreneurial GameFi projects. There is no other good news.
Core: Core is an innovative public chain compatible with EVM. Recently, it launched LstBTC, an ERC-20 liquidity pledge token pegged to Bitcoin at a 1:1 ratio. While holders can guarantee Bitcoin liquidity by holding LstBTC, they can also earn CORE tokens as rewards every day, giving BTC's LST another layer of income. Coupled with the recent continued weakness of the Ethereum ecosystem, most of the market's attention and funds have entered the BTCFi track. In addition, the mainnet launch of Babylon, the leading project in the BTCFi track, has realized AVS in the BTC ecosystem, and also accepted LstBTC and other BTC's LST. In this way, in order to increase their own yields, users will enter various BTC's LSD projects to pledge their BTC to participate in BTCFi, which has led to a rapid increase in the TVL of various BTC's LSD projects.
Base: Base is an Ethereum Layer2 based on OP Stack and backed by Coinbase Exchange. Recently, the activities on Base chain have increased significantly. This week, the daily transaction volume of Base has exceeded 4.5 million US dollars, and the transaction volume of USDC on Base chain in September has reached half of USDT on Tron. In particular, this week Solv Protocol announced the successful deployment on Base chain. Users can use cbBTC launched by Coinbase to mint SolvBTC to participate in various Bitcoin staking activities. Therefore, Base chain itself has also been affected by BTCFi, which has rapidly increased the TVL on the chain.
Osmosis: Osmosis is a DEX built on the Cosmos ecosystem with an independent and interoperable Layer1 public chain. It is the first application chain to achieve a huge IBC transaction scale and launch DEX activities in the Cosmos ecosystem. Recently, as the market is on an upward trend, more and more users are participating in on-chain DEX trading activities. As the trading volume increases, the yield of its liquidity providers also increases, so more people are involved in liquidity provision. And it announced a partnership with OmnityNetwork to introduce ckBTC into Osmosis's trading pairs, unlocking secure cross-chain Bitcoin transfers and enhancing BTC's liquidity and interoperability across DeFi. As the BTCFi track is relatively hot recently, it can also indirectly increase Osmosis's TVL.
Project TVL Growth Overview
The top 5 projects with the highest TVL growth in the past week (excluding public projects with smaller TVL, the standard is more than 30 million US dollars), data source: Defilama
Veno Finance（VNO）：
Project Introduction: Veno Finance is a decentralized liquid staking protocol. Users can use Veno to stake CRO, ATOM, ETH and TIA, and receive automatically compounded, yield-generating LST tokens LCRO, LATOM, LETH and LTIA on each chain. The LST token LCRO is designed to maximize composability by automatically accumulating CRO, ATOM, ETH and TIA staking yield values, and can be freely used in the DeFi ecosystem of Cronos and zkSync Era.
Latest development: Veno Finance continues to optimize its products and recently provided liquidity staking infrastructure services for Cronos zkEVM, rewarding users with zkCRO when using Veno Finance.
The interest rates for users staking CRO, ATOM, ETH and TIA on Veno Finance are 7.4%, 16.63%, 3.85% and 9.97% respectively, which are all higher than the interest rates for users staking on the CRO, ATOM, ETH and TIA mainnet. The interest rates for users borrowing CRO, ATOM, ETH and TIA in the market are 6.9%, 9.41%, 2.11% and 9.85% respectively. Although each item has a spread and arbitrage is theoretically possible, in practice only ATOM and ETH have arbitrage space.
Elixir (no token issued):
Project Introduction: Elixir is a project that provides liquidity for exchanges, allowing anyone to provide liquidity directly to the order book and bring liquidity to long-tail crypto assets. Any exchange can introduce liquidity from Elixir.
Recent developments: Elixir recently cooperated with Sei, and Sei launched a new native yield-stable asset fastUSD. Users can redeem fastUSD through Elixir's deUSD, and provide liquidity with Elixir's network infrastructure on Sei, providing a new unified and native yield-generating core liquidity component in the ecosystem. At the same time, users who use USDC to cast deUSD can get 1.7 times the points, and users who use Morpho to borrow can get 5 times the points.
Rho Markets (no token issued):
Project Introduction: Rho Markets is the native lending protocol in the Scroll ecosystem, which mainly provides lending services to users, including LRT assets and mainstream assets such as ETH and wBTC.
Latest development: Rho Markets has recently cooperated with more projects. By using the borrowing and lending users of the cooperative projects, they can obtain additional points ranging from 5% to 10%.
Rho Markets supports lending of ETH, USDT, USDC, wstETH, wrsETH, weETH, uniETH, USDe and SolvBTC.b. Its biggest advantage is that the lending cost is not high, ranging from 2.02%-5.68%, which is lower than the lending rate of most projects in the market.
Aerodrome (AERO):
Project Introduction: Aerodrome is a DEX based on the Base chain, using the AMM model and Ve(3,3) mechanism.
Latest development: Because the market activity of Crypto has increased this week, the transaction volume of various on-chain DEXs has increased accordingly, and Aerodrome has distributed 100% of the project's revenue to veAERO holders, increasing users' APY. At the same time, Aerodrome also provides users with high mining rewards, prompting users to continue to join liquidity mining.
Colend Protocol (no token issued):
Project Introduction: Colend is a lending protocol built on the Core chain. The main collateral of the project is BTC's LST token, which aims to promote the development of the Bitcoin-Fi track.
Latest development: Core recently launched LstBTC, an ERC-20 liquidity staking token pegged 1:1 to Bitcoin. While holders of LstBTC can guarantee Bitcoin liquidity, they can also earn CORE tokens as rewards every day, which has led to a sharp increase in TVL on the Core chain. At the same time, in order to release the liquidity of LstBTC, users will choose the lending protocol Colend Protocol on the Core chain, which has led to a rapid increase in TVL of Colend Protocol this week.
Overview of the Rising Stars
The top 5 tokens with the highest growth in the past week (excluding tokens with small trading volume and meme coins), data source: Coinmarketcap
This week's list of gainers did not show the characteristics of "sector concentration", and the rising tokens belonged to SocialFi, Yield Aggregation, BTC-L2, L1 and GameFi tracks.
UXLINK: UXLINK is a Web3 social platform and infrastructure based on acquaintance social relationships. It is committed to an integrated social ecosystem including Web3 portals, social decentralized exchanges, and infrastructure, and supports seamless integration into Telegram. This week, UXLINK was launched on the Korean exchange Upbit and futures with 75x trading leverage on Binance. After its launch on Upbit, its trading volume soared, and it once ranked first in Upbit's trading volume.
REEF: This week, the Reef project itself had no other good news except for daily development and communication work. It is worth mentioning that REEF showed a negative rate in contract trading on Binance this week, with the highest rate reaching -1%.
CKB: Nervos Network is a BTC-L2 project that uses the UTXO model. Last Friday, Nervos Network was launched on the Korean exchange Upbit. On the day of the launch, there was a large price difference between various exchanges. Upbit rose by 360% at its highest. Binance also stopped users from withdrawing coins. A series of events on the same day made CKB the most popular in the entire network. This week, CKB continued its previous popularity and gave a speech at Token2049 this week. On the same day, the CKB Lightning Network Fiber Network underlying protocol was launched with a complete beta version, which won some attention and traffic for itself.
(Focus on the project itself, not the price factor)
SAGA: Saga is a Cosmos-based L1 project, mainly targeting the gaming and entertainment sectors, allowing developers to self-start parallel and interoperable private chains. This week, Saga announced that it will release a new token economic model, which involves users not having to pay gas fees, all transaction fees are returned to developers, and project parties can achieve zero-cost development, etc. The specific content has not yet been announced. Saga has attracted some traffic and funds by changing the token economic model.
BIGTIME: Big Time is a massively multiplayer online role-playing game built on Ethereum. Since BIGTIME has been silent for most of this year, the GameFi track has not regained the market's attention. After BIGTIME was listed on Upbit last week and rose sharply, BIGTIME regained the market's attention, and it was found that after nearly a year of decline, the current price of BIGTIME is very low, so this week BIGTIME continued its previous strong trend and rose significantly.
The growth of the five tokens on this week’s gain list is significantly higher than that of last week. It can be seen that after the Federal Reserve’s unexpected rate cut, the market did not trade on the expectation of economic recession, but instead regained confidence in future increases.
Meme Token Gainer List
The entire market is on the rise this week, and the Meme track has also entered the rising channel with the market. After the Fed cut interest rates, the market is optimistic about the future development prospects, so some investors who were on the sidelines have also entered the market. Although the Meme coin project has also started to rise with the market this week, we can find that the increase in the Meme coin project this week is smaller than that of other Altcoins, which shows that after experiencing the previous Meme craze, the market's attitude towards Meme coin projects has begun to become rational, and not everyone has joined the hype of Meme coins as before.
Social Media Hotspots
Based on the top five daily growth in LunarCrush and the top five AI scores in Scopechat, the statistics for this week (9.14-9.20) are as follows:
The most frequently appearing theme is L1s, and the tokens on the list are as follows (tokens with small trading volumes and meme coins are not included) :
According to data analysis, the Layer 1 blockchain projects with the highest social media attention this week generally followed the market and showed an upward trend, and the trend this week was significantly stronger than the market. This is mainly because in the first half of this year, the decline of various Altcoin tokens was relatively large, generally falling by more than 50%. After the Fed cut interest rates this week, investors were generally optimistic about the subsequent development of the market, and thus re-entered the market to find some value coins with large declines for investment. After the disagreement on the development path within Ethereum, the market began to gradually turn its attention to various public chain projects, and the market funds gradually began to flow into various public chains, which made various public chain projects have their own relatively strong trends this week.
Overall overview of market themes
In terms of weekly returns, the GameFi track performed the best, while the RWA track performed the worst.
GameFi track: In the GameFi track, the IMX project occupies the largest market share, accounting for 31.76%, followed by BEAM, accounting for 11.15%. This week, the price of IMX rose by 16.92% and the price of BEAM rose by 9.08%, which to a certain extent promoted the growth of the entire GameFi track. And because the performance of the GameFi track projects this year is not dazzling, the overall decline is relatively large, so the rebound is relatively strong after the rise.
RWA track: Affected by the Federal Reserve's interest rate cut, the US dollar index and bond market yields fell this week, causing the yield of the RWA track, which is mainly based on the yield of real assets, to fall accordingly. Investment users have withdrawn from RWA projects and switched to projects with higher yields, so the performance of the RWA track this week was relatively poor.
Market discussion direction this week
BTCFi’s future development
Recently, due to the disagreement on the development direction within the Ethereum ecosystem and the lack of imagination and innovation of the Ethereum core team in the near future, the pessimism of market investors towards Ethereum has reached a peak, and they have doubts about its future development. As a result, more users and project parties have begun to leave the Ethereum ecosystem. At this stage, more funds and attention have entered the BTC ecosystem. At this stage, most of the BTCFi track is still learning from the previous development path of the Ethereum ecosystem, and is still mainly based on BTC's Restaking. There are three key points of market discussion: First, whether the BTC ecosystem will continue to follow the Defi path like the Ethereum ecosystem and take over the Defi banner of the Crypto market from the Ethereum ecosystem. Second, the BTC ecosystem is now dominated by Babylon, just like the significance of Eigenlayer for Restaking. Is it reasonable to pin the future of the development of the trillion-dollar ecosystem on a project? Can BTCFi's AVS really contribute to the security of market projects? Third, at this stage, VCs continue to pay attention to the development of the BTCFi track. Since we have learned the lesson that the Ethereum ecosystem’s transition to ecological infrastructure construction has led to the entire ecosystem developing less than expected, should the BTCFi track abandon the focus of the entire track on infrastructure construction and turn to the development of actual application projects in the BTC ecosystem?
Subject Tracking
BTCFi
Reasons for optimism:
This week, liquidity aggregation platforms such as Solv Protocol, BedRock, Lorenzo, and PumpBTC in the BTCFi track began to continuously exert their efforts. Among them, the TVL of Solv Protocol, BedRock, Lorenzo, and PumpBTC projects increased by 8.2%, 20.1%, 10.82%, and 36.67% respectively this week. It can be seen that the TVL of BTCFi track projects is growing rapidly.
Recently, the centralized exchange Coinbase launched the BTC-based packaged asset cbBTC and actively promoted it on the Base chain. After ten days of promotion, cbBTC has become the second most traded token in BTC-based LST. It can be seen that Coinbase's strong entry into the BTCFi track has brought a huge boost to the BTCFi track.
In the BTCFi track, Nervos Network in other BTC-L2 tracks has also launched a complete test version of the Fiber Network underlying protocol, indicating that various sub-tracks in the BTC ecosystem are booming.
BTCFi is not limited to each BTC-L2. For example, Solv Protocol and Pendle in the Ethereum ecosystem, Colend Protocol in the Core chain, etc., have begun to join the BTCFi track.
Current track conditions:
BedRock supports liquidity staking of uniBTC, as well as staking wBTC to obtain basic income, and users can use uniBTC to participate in other Defi projects.
Solv Protocol launched solvBTC.BBN based on Babylon. Users who pledge BTC can obtain double points from Babylon and Solv Protocol. It has also developed in other Defi fields, supporting application scenarios such as lending, trading, NFT, and Restaking.
Lorenzo Protocol is based on Babylon for Restaking and has launched a BTC principal and interest separation business, similar to Pendle. Users can pledge BTC to obtain basic income. Similar to Pendle, users can use stBTC and YAT to provide liquidity or pledge, or use stBTC as collateral for lending business.
PumpBTC supports users to use other LST to mint pumpBTC. In addition to earning Babulon points, participants can also obtain multiple points income combinations such as PumpBTC points + FBTC points + StakingAPR. Currently, it has been connected to Zircuit and Fuel, supporting users to deposit PumpBTC to earn extra points. It can also provide liquidity on DEXs such as PancakeSwap, Curve and DODO.
Kinza Finance supports users to deposit BTC to mint kBTC, obtain Kinza points and Babylon rewards, and borrow and lend in the Kinza currency market.
Nervos Network's CKB Lightning Network Fiber Network underlying protocol has launched a complete beta version.
Crypto Events Next Week
Tuesday (September 24) Super Return Asia 2024
· Friday (September 27): U.S. August core PCE price index annual rate; U.S. September University of Michigan consumer confidence index final value
· On Sunday (September 29), CZ was released from prison
Outlook for next week
1. Bitcoin: After the Federal Reserve announced a 50BP rate cut this week, the interest rate dot plot subsequently released showed that the median of the Federal Reserve's interest rate expectations by the end of 2024 was between 4.25% and 4.50%, which means that the next two interest rate meetings will reduce interest rates by 50BP, and the rate cut exceeded market expectations. In his subsequent speech, Powell made it clear that the rate cut was not caused by the economic recession, and the US economy is still strong. The market also chose to believe that the rate cut was not caused by the economic recession but was a defensive active rate cut, which triggered the market's optimism about future expectations. Investors who had previously chosen to wait and see have come out to buy assets, causing market prices to continue to rise. BTC also rose this week because of the Fed's interest rate cut. After entering the interest rate cut cycle, asset prices will continue to rise as liquidity in the market is abundant, but it takes time to release sufficient liquidity to the market. Therefore, it is expected that BTC will briefly enter a correction next week after this week's rise and then maintain volatility.
2. Ethereum: Ethereum's trend was weak this week, with the ETH/BTC exchange rate reaching a low of 0.038, the lowest in nearly three years. This was mainly because Vitalik spoke on behalf of Ethereum at the Token2049 conference this week. In his speech, Vitalik did not talk about Ethereum's future development path and substantive construction opinions, which caused the market to continue to be pessimistic about the future of Ethereum, causing the ETH/BTC exchange rate to continue to fall. The market's pessimism about Ethereum has reached a high point recently, and funds have been transferred from the Ethereum chain to other public chains, posing severe challenges to the construction of the Ethereum ecosystem. It is expected that ETH will perform worse than BTC in the future, and the ETH/BTC exchange rate will continue to fall.
3. Altcoin: Although Altcoins followed the market and rose more than the market this week, there was no unified market hotspot in Altcoins, and the innovative tracks that emerged were in the early stages and not perfect, so the funds were scattered and could not form a joint force for a certain track or project. The market was still in a relatively loose state, which can be seen as a strong rebound trend this week after the previous large decline. What makes the market more optimistic is that after the Fed's interest rate cut, market investors have changed their expectations for the future and began to gradually increase their confidence in the future. So we need to pay attention to whether there will be a bull market engine similar to Defi summer in the market to drive the entire Altcoin to continue to rise. So it is expected that Altcoin will still follow the trend of BTC next week and amplify the rise and fall of BTC.
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