Author: @arndxt_xo
Compiled by: Bai Hua Blockchain
Historically, Bitcoin has typically seen strong performance in February following its halving years.
1. Cycle Review and Forecast
1) Review of 2017 and 2021 Cycles
2017: Bitcoin saw a correction in January but resumed its uptrend in February.
2021: Similarly, BTC pulled back in January but regained its momentum in February.
2) Forecast for 2025
If history repeats itself, February this year may also see a similar upswing.
3) Market Rumors and Potential Drivers
Speculation around a Bitcoin-related executive order has been heating up recently.
Although unconfirmed, past experience suggests such events often have a significant impact on the market.
Next, we will dive deeper into the performance across different sectors.
2. Industry Overview
1) Infrastructure & Interoperability
Reducing tribalism, enabling cross-chain connectivity
Developments:
Superposition (Arbitrum L3) and Abstract (integrating Stargate's Hydra) are launching more efficient asset transfer and data sharing solutions.
LayerZero is expanding its reach, allowing Superposition applications to access liquidity from over 100 connected chains.
Arcana Network is collaborating with Scroll to allow users to pay gas fees in stablecoins (USDC/USDT) on any chain, significantly simplifying the onboarding process.
Outlook:
These developments indicate a continued momentum in advancing cross-chain interoperability. From L1 to L2 and L3, seamless asset and data mobility is gradually becoming an industry standard.
Projects that can integrate user-friendly interfaces, gas abstraction, and universal cross-chain bridges are poised to reduce the barriers to DeFi adoption caused by "network tribalism" in the past.
Looking ahead, we may see more customized L3 solutions emerge, such as those focused on gaming, RWA (real-world assets), and institutional-grade DeFi.
2) Liquidity, Lending, and Real-World Assets
The holy grail of credit and lending ecosystems
Developments:
Coinbase has launched BTC-collateralized loans for US users, providing more mainstream audiences the ability to leverage their Bitcoin assets.
Tradable has partnered with ZKsync to bring $1.7 billion in **Secured Credit (RWA)** on-chain, demonstrating how institutional-grade products are further penetrating the DeFi space.
Plume Network has attracted over $4.5 billion in asset commitments for tokenization, with a pre-launch TVL of $64 million, and has also launched a $25 million RWAfi ecosystem fund.
Outlook:
The boundaries between CeFi and DeFi are becoming increasingly blurred, which is a crucial sign of industry maturation.
Coinbase's entry into the crypto-collateralized lending market indicates that centralized exchanges are willing to offer products traditionally associated with DeFi platforms. This may siphon some DeFi users, but it also validates the importance of on-chain lending as a critical financial tool.
The integration of RWA is seen as the "holy grail" for connecting traditional finance and on-chain liquidity.
If this trend continues, DeFi may see stronger yields, deeper liquidity, and higher institutional trust, but it may also come with increased regulatory scrutiny.
The developments in these two areas reflect not only technological and ecosystem progress but also the industry's transformation from "novel technology" to mainstream financial instruments.
3) Liquid Staking & Synthetic Bitcoin
Innovations in staking mechanisms
Developments:
Babylon Labs has launched $YBTC, a 1:1 BTC-backed liquid staking Token, integrated with pSTAKE.
BrahmaFi has introduced the Onchain+ program, combining multi-chain strategies and AI agents (ConsoleKit) to automate DeFi operations.
Outlook:
Liquid staking has proven to be a key means of unlocking additional rewards for stakers without sacrificing liquidity. By tokenizing staked assets (such as BTC, ETH, etc.), DeFi participants can use them as collateral or trade them freely.
This "dual-yield" model (earning both staking rewards and potential DeFi yields) is likely to accelerate further development.
However, inherent risks exist: the more an asset is "liquid staked," the deeper the system's complexity. Protocols must maintain transparency and undergo thorough audits to prevent hidden leverage from eroding system stability.
4) Ecosystem Expansion and Strategic Partnerships
Mass user onboarding and enterprise collaborations
Developments:
Polygon Labs has partnered with India's largest telecom company, Reliance Jio (with over 450 million users), to integrate blockchain solutions into Jio's applications.
Ledger has integrated Uniswap into Ledger Live Desktop, providing a smoother experience for hardware wallet users.
Abstract is preparing for its mainnet launch, hinting at an upcoming wave of multi-chain product innovations.
Outlook:
Mass user onboarding and enterprise collaborations are key to the blockchain industry's mainstream adoption. This not only increases the exposure of blockchain technology but also further validates its value through real-world use cases.
Particularly in high-growth markets like India, Polygon's partnership with Reliance Jio could become an important model for driving blockchain adoption.
5) Airdrops, Incentives, and Liquidity Mining
Intensifying user competition
Developments:
Multiple projects, including Scroll, Quai Network, Fuel, and Bubblemaps, are launching airdrop campaigns or continuing reward seasons, with varying community participation criteria.
Protocols like Vertex (rewarding 2.1 million $SEI Tokens) and Derive (rewarding 2 million $DRV to liquidity providers) continue to offer user incentives. Nodepay and Solayer have introduced early claim processes or direct distribution at the TGE stage.
Outlook:
Airdrops have proven to be an effective way to bootstrap an initial user base, but they are also becoming a "standard" in the competition for new protocols.
As more projects offer incentives, user fatigue may become an issue. The key for projects is to attract users through genuine utility, not just "incentive chasing."
In the long run, protocols need to strike a balance between incentive mechanisms and sustainable Token economics. The best strategy is to design reward systems that can attract new users and retain them through the actual product value.
3. Narrative Overview
From liquid staking and ecosystem collaborations to user incentives, the industry's current focus is on enhancing user experience and engagement through innovation and strategic initiatives. These developments not only drive infrastructure improvements but also mark the gradual maturation and increased efficiency of DeFi.
1) BTC Price Trend and Macroeconomic Impact
Market Dynamics
On the first Monday of the new year, the market experienced a significant "bull trap." Bitcoin ($BTC) surged sharply after the New York market open, with the Coinbase premium attracting investors who believed the bull market was imminent. However, this signal proved to be false. The next day, Bitcoin price stagnated and plummeted, with the Altcoin market following suit.
2) Key Macroeconomic Factors Driving Uncertainty
Inflation Concerns: The strong January jobs report (NFP) released on January 10th signaled potential inflationary pressures, which could lead to fewer rate cuts, posing a bearish signal for the stock and crypto markets.
US Dollar Index (DXY): Reached a new high of 110.
10-Year Treasury Yield: Risen from 4.6% at the start of the year to 4.8%.
S&P 500 Index: Retested pre-election price levels.
3) AI Token Corrections and Consolidation Opportunities
$VIRTUAL: Declined 57% from a $5.2 billion market cap.
$AI16Z: Declined 63% from a $2.5 billion market cap.
$ZEREBRO: Declined 73% from an $820 million market cap.
$FAI: Declined from $650 million to $500 million.
$AIXBT: Remained near all-time highs despite the market weakness.
$GOAT: Declined 55%, still showing weak performance.
Emerging Winners
$ANON: Grew from $20 million to $240 million.
$AVA: Grew from $60 million to $300 million.
$PIPPIN: Grew from $15 million to $320 million.
4. Memecoins Dynamics
1) FARTCOIN
A meme coin loosely associated with AI narratives, rebounded 75% after a 56% decline. The market generally speculates that its market cap could surpass $5 billion or even higher.
$$BUTTHOLE and $$LLM
$BUTTHOLE: Reached a high of $140 million before declining 70%.
$LLM: Related to AI narratives, reached $150 million before declining 75%.
2) Dino Coins and USA Coins (Represented by $XRP)
$XRP: Up 6% year-to-date, outperforming the market.
Ripple's association with the incoming US government and CEO Brad Garlinghouse's relationships with key political figures have boosted market sentiment.
3) Other Strongly Performing Tokens
$HBAR
$XLM
$ADA
5. Other Significant Strength Trends
$SPX: Broke through $1 billion market cap, reached a high of $1.6 billion, and is now down 30%.
$GIGA: Approached $1 billion but faced resistance, declining 30%.
$SUI: Reached a historic high of $54 billion FDV, only declining 13%.
New Project Launches
$BIO: As the first major DeSci protocol to launch, with an FDV of $3 billion, but is now down 55%.
$GRASS: Showed strong rebound after weeks of sideways trading.
$USUAL: Controversial due to changes in the USD0++ redemption rules, down 66% from its all-time high.
Tokens to Watch Out For
$FTM: May have a second spring due to the delisting of trading contracts, but faces significant migration issues.
$RUNE: Facing risks related to ThorFi borrowing, being compared to LUNA.
Animal-themed meme coins: $POPCAT, $WIF, and $NEIRO performed the worst, with $POPCAT down 73% from its all-time high.
6. Outlook for 2025
The market has entered a new chapter, but the macroeconomic environment and the diversity of the Token market suggest we should remain cautious, while also seeking out promising opportunities.
Looking forward to reaching new highs in 2025 together with more market participants!
