Author: Frontier Lab
Market Overview
Overall Market Situation
This week, the cryptocurrency market exhibited a wide range of fluctuations, with the market sentiment index declining from 35% last week to 10%, entering the extreme fear zone. The market capitalization of stablecoins continued to grow (USDT reached $138.9 billion, USDC reached $51.9 billion), indicating that institutional capital is still entering the market; the poor market sentiment was mainly due to the lack of timely introduction of cryptocurrency-related policies by Trump after taking office. Although on Thursday, Trump signed a bill on cryptocurrencies and the SEC repealed SAB-121, it did not significantly boost market sentiment, causing most tokens to fall more than the benchmark, with Altcoins overall underperforming the benchmark index.
DeFi Ecosystem Development
The DeFi sector performed outstandingly, with TVL increasing from $53.5 billion to $53.8 billion, an increase of 0.56%, showing positive growth for two consecutive weeks. This was mainly due to the rise in underlying asset prices and project incentive measures, with on-chain APYs generally increasing, among which projects such as Sumer.money and Meteora performed well in terms of TVL, indicating that investors are beginning to focus on the basic returns in the DeFi field.
AI Sector Development
Affected by Trump's announcement of a $500 billion AI infrastructure plan, the total market value of the AI sector reached $41.9 billion, but then experienced a pullback due to the overall poor market sentiment. On the project side, Virtuals Protocol, Swarms and others continued to push forward technological innovation, focusing on the layout of autonomous trading Agents, multi-Agent collaboration frameworks and infrastructure construction, while the application of TEE technology, Agent economic systems and other emerging narratives are gradually gaining attention.
Meme Coin Trends
This week, the focus of the Meme coin market was on the official tokens TRUMP and MELANIA issued by Trump and Melania on Solana, which led to a large amount of capital and attention being concentrated on these two tokens, causing other Meme coins to experience significant declines, demonstrating the highly speculative and herd mentality characteristics of the Meme coin market.
Public Chain Performance Analysis
In the public chain ecosystem, Solana and Tron performed the most outstandingly, with Solana particularly benefiting from the issuance of the TRUMP token, reaching a historical high of $10.138 billion in on-chain stablecoin supply. At the same time, emerging public chains such as Sonic, Core and BSquared continued to innovate in DeFi and AI, showing good potential for ecosystem development.
Future Market Outlook
Looking ahead to next week, the market will focus on the Fed's FOMC meeting, the PCE price index, and tech company earnings reports as key events. The market is expected to maintain a volatile trend, but investors are generally optimistic about the opportunities that will arise as cryptocurrency policies become clearer after February, with the DeFi and AI sectors expected to continue to benefit from improved fundamentals and policy support, while competition in the public chain ecosystem will further intensify.
Market Sentiment Index Analysis
The market sentiment index declined from 35% last week to 10%, entering the extreme fear zone.
Altcoins underperformed the benchmark index this week, with most tokens falling more than the overall market. This was mainly due to the fact that market investors were generally waiting for the introduction of the Crypto bill and policies in Trump's new administration. Although on Thursday, Trump signed a bill on cryptocurrencies and the SEC repealed SAB-121, it did not significantly boost market sentiment, so investors are currently cautious about investing in the market, leading to the overall poor market sentiment. 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 a volatile trend this week, with the sentiment index entering the extreme fear zone.
Crypto projects related to DeFi performed better than other sectors, indicating that the market continues to focus on improving basic returns.
Projects related to AI received more attention this week, indicating that investors are actively looking for the next market breakout point.
Hot Sectors
AI Rise: From Trump's $500 billion infrastructure to 90% on-chain transactions being automated, Web3 is entering the first year of the AI revolution
This week, with Trump announcing a $500 billion AI infrastructure plan for the next 4 years, the overall AI sector rebounded, but then experienced a pullback due to the overall poor market sentiment.
Over the past week, various projects have not stopped innovating despite the huge market fluctuations, with Virtuals Protocol updating its value accumulation mechanism, Swarms setting up a $10 million token ecosystem fund and planning to launch new features, A16Z expanding into the Near and Avalanche ecosystems, and Holoworld launching a Launchpool, showing that the project teams are steadily pushing forward their development. The market is currently focused on areas such as autonomous trading Agents (like Cod3x, Almanak), multi-Agent collaboration frameworks (Spectral Lux), and infrastructure construction (Virtuals SDK), while emerging narratives such as TEE technology application verification, Agent economic system formation, and cross-chain Agent ecosystem integration are gradually gaining market attention.
According to Messari's forecast, by the end of 2025, an estimated 90% of on-chain transactions will no longer be manually operated by humans, but by a group of AI agents. These intelligent agents can not only make micropayments based on real-time data, but also continuously optimize liquidity pools and reasonably allocate rewards, thereby achieving more efficient and smarter operations. It can be foreseen that the Crypto market is about to enter the AI era.
DeFi Sector
TVL Growth Ranking
The top 5 projects by TVL growth in the past week (excluding projects with TVL less than $30 million), data source: Defilama
(Unissued): (Recommendation Index: ⭐️⭐️⭐️)
Collaborated with multiple projects to launch NFT mint activities
Project Introduction: Sumer.money is a cross-chain synthetic asset protocol with a lending market, deployed on supported blockchain networks. Sumer.money supports the creation of SuTokens (synthetic assets of USD, ETH and BTC), providing users with an experience similar to credit cards.
Latest Developments: Sumer Money's TVL successfully broke through the $100 million milestone this week, and Sumer Money expanded its ecosystem by collaborating with BeraSkool, Bera Horses and Kingdomly to launch NFT mint activities, and strategically joined Core DAO's Core Ignition program. The team also revealed optimization strategies for Sumer Money Multipliers (suBTC) through an AMA and is actively preparing new liquidity pool design proposals. Sumer.money maintains community engagement through Twitter interaction contests.
Meteora (Unissued): (Recommendation Index: ⭐️⭐️⭐️)
Enhancing user experience by launching the "Liquidity Ratio Slider" feature
Project Introduction: Meteora is a DeFi project based on the Solana blockchain, aiming to improve capital efficiency and trading experience through optimized liquidity management. It provides decentralized liquidity management tools, including automated trading, fee analysis, and anti-bot protection for token issuance.
Latest Developments: This week, Meteora launched the innovative "Liquidity Ratio Slider" feature, simplifying the process for users to adjust their asset liquidity allocation. In terms of ecosystem building, the LP Army has shown a diversified development trend, attracting users from different languages and regions to participate in liquidity provision, and has collaborated with the Starseed team. In community operations, by hosting LP Army community calls and Office Hours, the project has continued to strengthen interaction and communication with users, demonstrating its continuous innovation capabilities and global development strategy in the DeFi field.
Silo Finance (SILO): (Recommendation Index: ⭐️⭐️)
Launched S-ETH and S-USDC to increase user returns
Project Introduction: Silo Finance is a decentralized, permissionless lending protocol that provides secure and efficient money markets by utilizing isolation elements. Silo's design aims to solve the main pain points of existing lending protocols, with the security vulnerabilities of shared pools addressed through the isolation of each lending pool.
DeepBook reached an important milestone this week with a 24-hour trading volume of $52.6 million in its V3 version, which not only confirms the maturity of its technical architecture but also reflects its important position in the DeFi field. By continuously emphasizing its low-fee advantage and the brand positioning of "I am the pulse of DeFi", DeepBook has further consolidated its position as a core DeFi infrastructure in the Sui ecosystem. DeepBook is making substantial progress in the decentralized trading sector through optimized user experience and stable technical support.
RAY: Raydium seizes the opportunity of the Trump concept coin and launches a 10x leverage contract, distributing 200,000 USDS in weekly liquidity incentives.
With the Solana ecosystem booming this week, Raydium, the well-known DEX on the Solana chain, has also received a significant boost. Raydium quickly followed the market trend this week and launched perpetual contracts for $MELANIA and $TRUMP with 10x leverage, expanding its Perps trading product line. It also renewed the USDS reward program, providing weekly rewards of 50,000 USDS + 750 RAY in the SOL-USDS Vault, 100 RAY per week in the SOL-USDS 0.03% pool, and 150,000 USDS per week in the USDS-USDC Vault, continuously attracting users to participate and enhancing platform liquidity.
BUZZ: Hive AI upgrades to a Swarm distributed architecture to achieve multi-agent collaboration, and the Market Agent intelligently tracks the strategies of top traders.
This week, Hive AI implemented a multi-agent collaboration mechanism through its innovative Swarm distributed architecture, significantly improving the overall system performance. The Token Analysis Agent updated the chart tools and token data UI, and also launched an experimental investment portfolio page, enhancing support for liquidity management of the Raydium protocol. By continuously integrating more protocol data, Hive AI provides users with more comprehensive investment portfolio analysis and yield discovery capabilities. Notably, Hive AI's Market Agent achieves intelligent analysis of top traders' behavior, showcasing its unique advantages in cryptocurrency data processing and smart analysis.
SOL: The Trump couple's airdrop on Solana ignites a Meme frenzy, with the on-chain stablecoin supply reaching a new high of over $100 billion.
Solana received a significant boost this week due to the Trump and Melania's official Meme tokens TRUMP and MELANIA issued on Solana, bringing massive traffic and capital inflows to the network. The on-chain stablecoin supply on Solana reached a record high of $101.38 billion. Solana also partnered with E Money Network to enable the use of Solana stablecoins for payments and rewards at over 150 merchants globally. Additionally, Multicoin Capital released a research report highlighting Solana's technical advantages in low latency and tight spreads, while the ecosystem welcomed Indie.fun as a Solana-exclusive game community fundraising platform.
Meme Token Gainers
Data source:
This week, the market was in a wide-ranging fluctuation. After the Trump and Melania issued their official Meme tokens TRUMP and MELANIA on Solana, most of the market's attention and capital were attracted, leading to significant declines in most other tokens, especially other Meme coins.
Social Media Hotspots
Based on the top five daily growth and top five AI score data from LunarCrush and Scopechat, the most frequently mentioned topic this week (1.18-1.24) was L1s, with the following tokens listed (excluding tokens with low trading volume and Meme coins):
Data source: Lunarcrush and Scopechat
The TRUMP token caused market disruption and capital outflow, but Layer 1 projects rebounded first due to their high DeFi yields.
According to the data analysis, the Layer 1 projects received the highest social media attention this week. The overall market experienced wide-ranging fluctuations, and when Trump issued his official Meme token TRUMP on Solana last weekend, the market's liquidity was quickly drained, with active on-chain capital rushing into Solana. As a result, projects across various sectors experienced declines. Although Trump signed crypto-related executive orders and the SEC repealed SAB-121 on Thursday, it did not significantly boost market sentiment. However, after the initial dip, Layer 1 projects rebounded as the market remained optimistic about future performance, and the high APYs of DeFi projects on these chains attracted more users to participate, as the underlying assets of most DeFi projects are the tokens of these public chains.
Overall Market Theme
Data source: SoSoValue
Based on weekly returns, the DeFi sector performed the best, while the GameFi sector performed the worst.
DeFi sector: The DeFi sector has a large number of projects, and in SoSoValue's sample, LINK, UNI, and AAVE account for the largest shares at 43.36%, 18.11%, and 13.07%, respectively, totaling 74.54%. This week, LINK, UNI, and AAVE increased by 11.42%, 2.13%, and 7.86%, respectively, leading to the highest gains in the DeFi sector. Additionally, the significant price fluctuations this week created numerous arbitrage opportunities, contributing to the strong performance of the DeFi sector.
GameFi sector: In this cycle, the GameFi sector has not received much market attention, leading to a lack of capital and traffic inflow. This has resulted in the loss of the previous "wealth creation" effect, causing the sector's attention to decline further. The top tokens in this sector, including IMX, BEAM, GALA, SAND, and AXS, account for 71.99% of the sample, and they all experienced significant declines this week, leading to the worst performance in the GameFi sector.
Upcoming Crypto Events Next Week
Thursday (January 30): FOMC interest rate decision; US initial jobless claims as of January 25; US Federal Reserve interest rate decision (upper limit) as of January 29; Plan B Forum El Salvador 2025; Ethereum Ziirich 2025; Tesla Q4 2024 and full-year earnings release
Friday (January 31): US December core PCE price index YoY; OneKey Card announces gradual full service termination
Next Week's Outlook
Macroeconomic Factors Analysis
Next week, there will be several significant financial events, including the Federal Reserve's policy meeting, the release of the US December core PCE price index YoY, and the start of the earnings season for US-listed companies. The market has already fully priced in the Fed's decision to keep interest rates unchanged at the January meeting. The US December core PCE price index YoY, which is one of the Fed's key indicators, will likely influence the central bank's next policy decision. Additionally, the earnings reports of major US tech companies will cause short-term market volatility. Therefore, the market is expected to remain in a fluctuating trend next week.
Sector Rotation Trend
Although the DeFi sector's market sentiment is currently poor after the recent market fluctuations, investors generally expect the market to rebound in February as crypto-related policies are gradually announced. Therefore, most investors are reluctant to sell their tokens and are instead participating in yield farming projects to increase their returns.
The AI sector and the AI Agent track have not received sustained attention from the market, and the market capitalization has started to decline for the first time, with a current market value of $15 billion, down nearly 5.66% from last week. This week, due to Trump's announcement of a $500 billion investment in AI infrastructure over the next 4 years, the AI sector has seen an overall rebound, but this rebound trend has not been sustained, indicating that the current market sentiment is poor, and market investors are generally waiting for the release of the Crypto bill and policies in Trump's new administration, so the current investment in the market is cautious. However, as an industry supported by the US government in the next 4 years, the AI track still has great development potential in the future. According to a market research report, by the end of 2025, it is estimated that 90% of on-chain transactions will no longer be manually operated by humans, but will be completed by a group of AI agents. It can be foreseen that the Crypto market is about to enter the AI era.
