Institutional Outflows and Holiday Liquidity Crunch Intensify Bearish Sentiment as Crypto Markets…

Institutional Outflows and Holiday Liquidity Crunch Intensify Bearish Sentiment as Crypto Markets Face Further Downside｜ Frontier Lab Weekly

Market Overview

Market Summary

The cryptocurrency market exhibited a volatile downward trend this week, with both BTC and ETH experiencing fluctuations characterized by a downward trajectory. The Fear & Greed Index rose from 23 last week to 38, moving the overall market sentiment from the “Fear” zone into the “Neutral” zone.

Stablecoin Market Dynamics

The total market capitalization of stablecoins trended downward, showing a divergence between USDT (rising) and USDC (falling):

• USDT: Market cap reached $186.8 billion, up 0.16% WoW. While the net capital inflow trend from last week, the scale was small (only $300 million), indicating that non-US-based investors remain relatively cautious.
• USDC: Market cap reached $76.5 billion, down 1.92% WoW. This represents a significant decline of $1.8 billion, suggesting that US-based investors are engaging in risk-aversion and exiting the market.

BTC Market Trading Volume

Influenced by the holiday effect, trading activity in the BTC market dropped significantly. Data shows that the total trading volume for BTC on Binance and Coinbase was 114,328 BTC, a sharp 30.39% decrease from last week’s 164,264 BTC.

• Binance: Volume dropped from 115,463 to 78,330 BTC.
• Coinbase: Volume dropped from 48,801 to 35,998 BTC. This reflects a contraction in market liquidity and weakened investor sentiment during the holiday period.

BTC ETF Market Trading Volume

The BTC ETF market also saw a major contraction due to the holidays. BlackRock’s IBIT, the market leader, saw its volume plummet from 343 million shares last week to 141 million shares this week — a 58.89% drop. This is primarily attributed to the reduction in institutional activity during the Christmas break, reflecting a slump in demand for crypto ETF products in traditional finance.

Market Driver Analysis

• Institutional Outflows: BTC/ETH spot ETFs and public treasuries continued the trend of declining buying power. Total selling volume exceeded buying volume, reflecting a shift toward cautious risk-aversion as institutions exit risk assets during the holidays.
• Divergent Macroeconomic Data: The US Q3 Real GDP (annualized) hit 4.3%, far exceeding the 3.3% expectation, proving the US economy remains resilient. Meanwhile, the Core PCE index was 2.9%, meeting expectations. This strengthened expectations for Fed rate cuts in 2026, providing some relief to market sentiment.
• The “Holiday Effect”: With the US market in “Christmas Mode,” there was a “macro data vacuum.” The resulting decline in liquidity led to higher volatility in risk assets, prompting many investors to sell off portions of their holdings for safety.

Policy Expectations and Regulatory Progress

• Liquidity Contraction: During the Christmas break, lower trading volumes and the tendency to de-risk have increased the risk of price volatility.
• Extended Data Vacuum: As the New Year holiday approaches, there will be a continued lack of major macro data, leaving the market without clear direction.
• Weakened Institutional Activity: Major institutions have scaled back or halted trading, further compressing liquidity and exacerbating price swing risks.

Key Events Forecast for Next Week

• Continuation of “Holiday Sideways/Down”: The market will likely remain in holiday mode, with low liquidity and weakened activity. Investors should beware of “flash crash” risks caused by thin liquidity.
• Institutional Buying Power as the Variable: Net outflows from treasuries and ETFs are a key indicator. Given the holiday backdrop, the sustainability of buying power is highly uncertain and will be a decisive factor for market direction.
• Magnified Risks in a Data Vacuum: In the absence of macro guidance, sentiment and technical factors will dominate. Negative news could trigger outsized market reactions as buyers remain sidelined.

Market Outlook

• High Probability of Downward Trend: Based on institutional outflows, the New Year effect, and liquidity contraction, the market is highly likely to trend downward next week.
• Prominent Liquidity Risk: With reduced absorption capacity, price fluctuations may exceed normal ranges. Any adverse data could lead to rapid price drops.
• Maintain High Caution: Investors should strictly control risk exposure and prepare for defensive positioning to handle potential short-term sharp declines.

Bearish Targets for Next Week

Targets: REZ, HEMI, MAV, SOMI

REZ: Restaking Platform Market Share Shrinking, Token Unlocks Face Liquidity Challenges

Project Fundamentals and Positioning: Renzo is a Liquid Restaking Token (LRT) protocol built on EigenLayer, designed to simplify restaking by allowing users to earn rewards without locking up their liquidity. It issues ezETH, a liquid derivative, managing risk and yield strategies through smart contracts.

Deteriorating Market Environment

• Weak ETH Performance: ETH has failed to keep pace with BTC’s resilience. Consequently, the Ethereum ecosystem lacks a “wealth effect,” leading to sluggish performance across the entire Restaking sector.
• Capital Outflows: ETH’s significant price drop has hit ecosystem projects like Renzo even harder, resulting in substantial capital outflows.
• Increased Competition: Renzo’s market share in the Restaking sector continues to decline, currently sitting at only 9.31%, indicating a weakening competitive position.

Severe Deterioration of Fundamental Data

• Continuous Decline in TVL: Analyzed in ETH terms, Renzo’s Total Value Locked (TVL) is in a persistent downtrend and is currently at a recent low of only 209,541 ETH, reflecting a significant lack of user confidence.

• Sustained Capital Outflow: On-chain data indicates that the Renzo project is experiencing net capital outflows, signaling that investors are actively withdrawing funds.

• Stagnant Protocol Revenue: Project “Fees” data shows that Renzo’s revenue has remained at a very low level for a long period, suggesting minimal user adoption. Current daily fee revenue is only approximately 20 ETH.

• Minimal New User Engagement: Recent on-chain data shows that daily deposits into the Renzo project are frequently in single digits. There is almost no new capital entering, and user growth has reached a standstill.

• Significant Increase in Withdrawals: On-chain metrics reveal a marked increase in withdrawal activity, reaching as high as 27,951 ETH in a single day, highlighting investor anxiety and accelerating capital flight.

Token Unlock Risk Assessment

• Large-Scale Unlock at an Opportune Time: On December 29, 423.7 million REZ tokens (representing 4.24% of the total supply) will be unlocked. This massive unlock coincides with a period where the project’s fundamentals are severely deteriorating.
• Insufficient Market Absorption Capacity: The average daily trading volume for REZ is only about $1.1 million. The market liquidity is clearly insufficient to effectively absorb such a large volume of newly unlocked tokens, which will likely create immense selling pressure.

• Strong Incentive to Sell Among Holders: Based on the linear unlock schedule, this release primarily involves investing institutions and the project team. Given that the project is currently in a downward cycle, these holders have a strong incentive to liquidate their positions and exit.
• Thin Liquidity Depth: The relatively small daily trading volume reflects poor market depth, meaning the market cannot effectively buffer the price shock triggered by a large-scale token release.

Summary

Renzo is currently facing multiple systemic risks. At the market level, the overall poor performance of the Ethereum ecosystem has led to a decline in the appeal of the Restaking sector. Operationally, the project is struggling with a continuous drop in TVL, stagnant user activity, and persistent capital outflows. From a capital perspective, the upcoming unlock of 423.7 million REZ tokens on December 29th is expected to create massive selling pressure in a thin liquidity market that sees only $2.5 million in average daily trading volume. Furthermore, the primary entities involved in this unlock are investment institutions and the project team, both of whom have strong incentives to cash out. The convergence of these multiple bearish factors exerts sustained negative pressure on the price of REZ, making it difficult to reverse the downward trend in the short term.

HEMI: Collapse of Ecosystem Data and the Risk of 245 Million Token Unlock Selling Pressure

Project Fundamentals and Positioning：Hemi is an Ethereum Layer 2 scaling solution designed to enhance the Ethereum network’s transaction speed and reduce costs through advanced blockchain technology. Utilizing an innovative architectural design, Hemi processes transactions off-chain before submitting them to the Ethereum mainnet for verification, aiming to achieve higher speeds and lower fees while maintaining Ethereum’s security and decentralized nature.

Comprehensive Decline in On-Chain Operational Data

• Massive Capital Flight: Hemi’s Total Value Locked (TVL) has plummeted from its peak of $324 million to just $16.13 million, a staggering 95.02% decrease. This indicates that the vast majority of capital has exited the Hemi ecosystem, leaving on-chain liquidity severely depleted.

• Stagnant On-Chain Activity: Trading volume on Hemi’s decentralized exchanges (DEXs) continues to slide, currently hovering around only $290,000 per day. This reflects extremely low user frequency and a lack of vitality within the on-chain trading ecosystem.

• Negligible Gas Fee Revenue: Hemi generates only about $80 in daily gas fees, while the total daily revenue for ecosystem DApps is a mere $730. These core metrics directly reveal that there is almost no actual demand for the network, which now exhibits the characteristics of a “dead chain.”

• Abysmal Ecosystem Project Revenue: Revenue data for applications on the Hemi chain shows consistently poor performance. Total daily revenue across all projects is approximately $730, an amount insufficient to sustain the long-term normal operation of the ecosystem.

• Stablecoin Market Cap Hits All-Time Low: The market capitalization of stablecoins on Hemi has crashed from $62.2 million to $3.84 million, a 93.82% drop. This persistent downward trend signals a continuous outflow of funds and further deterioration of the ecosystem’s financial foundation.

Circulating Supply Shock and Selling Pressure Analysis

• Significant Unlock Scale: On December 29, 181.22 million HEMI tokens (representing 1.21% of the total locked amount) will be unlocked. In the current market environment, this volume poses a substantial risk.
• Severe Lack of Market Absorption Capacity: HEMI’s average daily trading volume is only about $1.8 million. Compared to the size of the upcoming unlock, market liquidity is clearly inadequate to absorb the resulting selling pressure, which will likely exert a negative impact on the price.

• Strong Incentive to Sell Among Holders: According to the linear unlock schedule, this release primarily involves investment institutions and the project team. Given that the project is in a clear downward cycle, these holders have a strong incentive to cash out, making a sell-off highly probable.

Summary

The Hemi project faces multiple systemic risks. At the market level, the Layer 2 sector is undergoing a crisis of confidence, with its scaling value being questioned as Hemi fails to establish a competitive advantage. Operationally, the project has effectively lost its basic functionality as a blockchain network, evidenced by a 95.02% TVL collapse, daily trading volume of just $290,000, and negligible daily gas revenue of $80. From a capital standpoint, the unlock of 181 million HEMI tokens on December 29th will create significant selling pressure in a thin liquidity market with only $1.8 million in daily volume. With the unlocking parties being institutions and the team — who have a high motivation to liquidate — these bearish factors collectively place sustained downward pressure on the HEMI token price. The project now displays the typical traits of a “dead chain,” making a reversal of its downward trend unlikely in the short term.

MAV: Comprehensive Deterioration of Fundamentals Combined with Large-Scale Unlock Impact Analysis

Project Fundamentals and Positioning

Maverick Protocol is a decentralized automated market maker (AMM) focused on enhancing capital efficiency and the trading experience through innovative liquidity management mechanisms. By utilizing a dynamic liquidity distribution strategy, the project aims to provide liquidity providers (LPs) with superior yield opportunities while offering traders lower slippage and a more effective price discovery mechanism.

Deterioration of Operational Data

• Cliff-like TVL Drop: The Total Value Locked (TVL) in Maverick Protocol has plummeted from its historical high of $60.74 million to just $5.31 million, a staggering decline of 91.25%. This metric reflects a massive exodus of user funds and a severe loss of market confidence.

Failed Revenue Model: Although gas fee revenue has shown minor recent fluctuations, it remains at negligible levels. The protocol’s average daily on-chain fees have collapsed from a peak of $235,900 to approximately $200 today — a 99.91% drop. This extreme deterioration indicates that actual protocol utility and profitability have effectively hit zero, creating a negative feedback loop.

Sluggish Trading Activity: Daily trading volume is trending sharply downward, falling from highs of $280 million to around $310 million. This rapid decline underscores a swift reduction in the number of active users interacting with the protocol.

Uncompetitive Yields: DeFi protocols rely on high yields to attract and retain users; however, Maverick Protocol’s average yield sits at only 2.5%. This is significantly lower than other available DeFi opportunities, making it increasingly difficult to prevent user churn.

Token Unlock Risk Assessment

• Unlock Scale and Structure: On January 1, 55.39 million MAV tokens (representing 2.77% of the total locked supply) will be unlocked. Given the current limited market liquidity, this release is expected to cause a significant shock to the market’s supply-demand balance.
• Recipient Risk: According to the whitepaper’s linear unlock schedule, this release primarily involves investment institutions and the project team. Against a backdrop of failing fundamentals, these holders face strong incentives to cash out and exit their positions.
• Severe Lack of Market Absorption: The average daily trading volume for MAV is only about $700,000. Relative to the size of the upcoming unlock, market liquidity is extremely scarce, making it highly unlikely that the market can effectively absorb the selling pressure from the increased token supply.

Summary

The Maverick Protocol is currently trapped in a triple crisis: a total collapse of fundamental data, a loss of market competitiveness, and the impact of a large-scale token unlock. With TVL down 91.25% and revenue having vanished by 99.91%, the concentrated unlock of 55.39 million MAV tokens could trigger a chain reaction of selling, exerting sustained downward pressure on the token’s price.

SOMI: High-Performance Layer 1 Vision Shattered as Omni-Chain Data Plummets Amid Unlock Crisis

Project Fundamentals and Positioning

Somnia is a high-performance Layer 1 blockchain specifically engineered for real-time on-chain applications, such as immersive gaming and social networks. Unlike traditional solutions, it avoids the use of sidechains or off-chain workarounds, offering seamless scalability and low costs. Somnia is EVM-compatible and rooted in gaming and metaverse innovation, empowering developers to create accessible, high-performance virtual economies and communities.

Severe Deterioration of Fundamental Data

• Cliff-like Decline in On-Chain Activity: Somnia’s on-chain fees have dropped to approximately $800 per day, a massive decrease from its historical highs. This indicates that user activity has essentially hit zero, leaving the project’s utilization severely insufficient.

• Continuous Contraction of DEX Volume: On-chain DEX trading volume has shown a persistent downward trend and is currently maintaining a low of only $70,000 per day. This reflects a critical lack of transaction demand and the exhaustion of ecosystem liquidity.

• Collapse of Ecosystem Application Revenue: Total daily revenue for on-chain ecosystem projects is only around $18, suggesting that the application layer has fundamentally lost its user base and the overall ecosystem has reached a standstill.

• Massive Withdrawal of Cross-Chain Capital: Cross-chain TVL has plummeted from a peak of $2.48 million to just $85,000, a staggering 96.57% drop. This indicates a severe lack of capital confidence and a wave of panic-driven withdrawals.

Token Unlock Risk Assessment

• Unfavorable Scale and Timing: On January 2, 8.75 million SOMI tokens will be unlocked. Conducting a large-scale unlock at a critical moment when project fundamentals are deteriorating across the board represents extremely poor timing.
• Insufficient Market Absorption Capacity: SOMI’s average daily trading volume is only around $2 million. Compared to the unlock of 8.75 million tokens, market liquidity is clearly unable to effectively absorb the new supply, which will create immense selling pressure.

• Strong Incentive to Sell Among Holders: According to the linear unlock schedule, this release primarily involves investment institutions and the project team. Against the backdrop of a clear downward cycle for the project, these holders have a powerful incentive to cash out and will likely choose to exit.
• Thin Liquidity Depth: The relatively small daily trading volume reflects a severe lack of market depth, making it impossible to effectively buffer the price shock brought about by a large-scale token unlock.

Summary

Somnia is facing an all-encompassing deterioration of its fundamentals: on-chain fees, DEX volume, and ecosystem revenue have all declined sharply, while cross-chain TVL has crashed by 96.57%, leaving user activity near zero. The unlock of 8.75 million tokens on January 2nd will create massive selling pressure within a thin liquidity market of only $2 million in daily volume. The strong motivation for investment institutions and the team to cash out further intensifies the risk of a sell-off.

Token Unlock Schedule Next Week (Unlock Value > $1 Million)

Market Sentiment Index Analysis

The Market Sentiment Index rose from 23 to 38. This week, BTC fell by 1.41%, ETH fell by 2.71%, and TOTAL3 rose by 2.09%. Altcoins as a whole moved from the “Short” (Bearish) zone into the “Neutral” zone.

Upcoming Major Crypto Events

• Wednesday (December 31) ：The Federal Reserve will release the minutes from its monetary policy meeting, and the U.S. will report Initial Jobless Claims for the week ending December 27.

Sector Performance

Based on weekly returns, the RWA (Real-World Assets) sector was the best performer, while the Layer 2 (L2) sector performed the worst.

• RWA Sector: Within the RWA sector, ONDO, SKY, PENDLE, and OM hold the largest market shares, accounting for a combined total of 97.12%. Their performance this week was 1.93%, 19.22%, -1.78%, and 8.61%, respectively. It is evident that the gains in RWA projects were higher than those in other sectors, making it the top-performing category.
• Layer 2 Sector: Within the Layer 2 sector, MNT, POL, ARB, IMX, and OP hold the largest market shares, accounting for a combined total of 69.26%. Their price movements this week were -8.88%, -0.51%, -3.39%, -4.46%, and -3.46%, respectively. Most Layer 2 projects experienced larger declines compared to other sectors, resulting in Layer 2 sector being the worst performer.

Summary

This week, the cryptocurrency market exhibited a volatile downward trend, with BTC and ETH recording declines of -1.41% and -2.71%, respectively. The Market Sentiment Index rose from 23 to 38, moving from the “Fear” zone into the “Neutral” zone. The stablecoin market showed a divergence USDT market cap rose by 0.16% to $186.8 billion, with a net capital inflow of $300 million, reflecting a relatively cautious stance among non-US investors; meanwhile, USDC market cap decreased by 1.92% to $76.5 billion — a drop of $1.8 billion — indicating that US investors are engaging in risk-aversion and exiting the market. Institutional fund flows turned to net outflows, as the total selling volume of BTC and ETH spot ETFs and public treasuries exceeded buying volume, reflecting a shift toward cautious risk-aversion during the Christmas holiday.

The market is expected to continue its “holiday mode.” With the New Year holiday approaching next week, there will be a continued lack of major macroeconomic data, creating a sustained “macro data vacuum” and leaving the market without clear directional guidance. Liquidity has dropped significantly during this period, and major institutions have reduced or halted trading activities, further compressing market liquidity and exacerbating the risk of price volatility. There remains significant uncertainty regarding the sustainability of institutional buying power; against the backdrop of holiday liquidity contraction, any negative news could trigger an outsized market reaction.

Considering multiple adverse factors — including net institutional outflows, the New Year holiday effect, liquidity contraction, and token unlock pressures — the market is highly likely to experience a downward trend next week. Investors should maintain a high degree of caution, strictly control risk exposure, and be prepared for defensive positioning to handle potential short-term sharp market drops.