Crypto Market Rebound: Watch Unlock Selling Pressure & Data Risks | Frontier Lab Weekly

Market Overview

General Market Summary

The cryptocurrency market experienced a rebound this week, with both BTC and ETH showing an upward trend. The market sentiment index rose from 30 last week to 35, although the overall sentiment remains in bearish territory.

Stablecoin Market Dynamics

The total market capitalization of stablecoins has shown an upward trend, with a significant increase from last week. Both USDT and USDC experienced simultaneous growth:

• USDT: Market cap reached $184.5 billion, a week-over-week increase of 0.59%. This marks an end to last week’s net capital outflow, with a net inflow of $1.1 billion this week. This suggests that non-U.S. Investors, who were previously exhibiting risk-off behavior, have started to re-enter.
• USDC: Market cap reached $76.0 billion, a week-over-week increase of 2.15%. This reverses last week’s decline, with an increase exceeding $1 billion, reaching $1.6 billion. This indicates that U.S. Investors have begun to re-enter the market.

Analysis of Market Drivers

• Institutional Fund Flow Reversal: Spot BTC and ETH ETFs, as well as publicly traded corporate treasuries, resumed buying behavior this week, ending last week’s significant sell-off. BlackRock and Fidelity, while their net inflows were modest, have turned back to net positive. Listed corporate treasuries also stopped selling and began small-scale buying.
• Significant Improvement in Fed Rate Cut Expectations: Last Friday, Federal Reserve Vice Chair and New York Fed President Williams hinted at a potential rate cut in December. This week, multiple Fed officials explicitly supported a December rate cut. Market bets on a December rate cut soared from 30% last week to over 80%, significantly boosting market optimism.
• Impact of Macro Data Lull: The U.S. government decided to postpone the release of PCE data until December 5th. The lack of major macro data this week, coupled with the Thanksgiving holiday, resulted in a market lacking clear directional guidance.
• Market Sentiment Repair Signs: The shift of institutional purchasing power from negative to positive indicates that the market has moved out of extreme fear and is entering a recovery phase.

Policy Expectations and Regulatory Progress

• Fed Policy Stance Tilting Towards Easing: Multiple Fed officials clearly expressed support for a December rate cut this week, shifting policy expectations from divergence to a relatively consistent easing stance.
• Rate Cut Probability Skyrockets: Market bets on a Fed rate cut at the December FOMC meeting have surged from 30% to over 80%, marking a fundamental change in policy expectation.
• Consideration of Policy Transmission Lag: The liquidity release following the resumption of the U.S. government operation still requires time to transmit, limiting its immediate actual support for the market in the short term.

Key Events Forecast for Next Week

• Core Economic Data Release: The U.S. October Core PCE Price Index Year-over-Year and November ADP Employment Change are due for release. These will directly impact the probability of a December Fed rate cut and will be a key focus for market players.
• Sustainability of Institutional Buying Power in Doubt: Although institutional funds returned to net buying this week, the sustainability of this purchasing power remains a key factor in determining the market’s direction and requires close observation.
• Data-Driven Volatility Risk: Despite the market’s large pricing in a December rate cut, the upcoming economic data could still influence market expectations to some extent, leading to short-term trading volatility.

Market Outlook

• Cautious Optimism with a Defensive Stance: While market sentiment has begun to recover and institutional funds are flowing back in, investors should maintain caution due to the uncertainty surrounding economic data and the sustainability of institutional buying power.
• Focus on Data-Driven Volatility: Next week’s Core PCE and ADP employment data may affect the market’s direction in the short term. Unfavorable data may cause the market to re-enter a risk-off mood.
• Guard Against Reversal Risk: Institutional purchasing power often follows market trends. Under the influence of unfavorable data, the market may quickly reverse from recovery to decline. Investors should maintain a defensive posture and strictly control risk exposure.

Bearish Targets for Next Week (WAL, SOMI, STO)

WAL: Decentralized Storage Project Facing Marginalization, Dual Impact of User Loss and Token Unlock

Project Fundamentals and Positioning

Walrus is a decentralized storage and data availability protocol built on the Sui network, launched by the Sui development team, Mysten Labs. It aims to solve the problem of storing unstructured data on-chain with lower cost and higher efficiency. It employs advanced erasure coding technology to split data into multiple fragments for distributed storage, ensuring data integrity and recovery even if two-thirds of the nodes are offline, demonstrating high availability and strong fault tolerance.

On-Chain Application Status

Walrus, as a decentralized storage and data availability project, is showing severe deterioration in its fundamental data. Core business metrics reveal that Walrus’s on-chain fees have persistently remained at an extremely low level of around $100 per day for the past six months. This figure is fatal for a decentralized storage project, as on-chain fees directly reflect users’ actual demand and usage frequency for the storage service.

The current revenue level suggests that Walrus has almost no real users utilizing its storage services, meaning the project’s core value proposition has failed to gain market validation. For decentralized storage and data availability projects, user adoption is fundamental to survival. The sustained low-revenue state indicates that Walrus has failed to establish effective advantages in key dimensions such as technological competitiveness, user experience, and cost-effectiveness. Its commercialization process is essentially stalled, and the project faces a severe risk of market marginalization.

Token Unlock Risk Assessment

• Unfavorable Scale and Timing: 32.7 million WAL tokens are scheduled to be unlocked on December 1st. This large-scale unlock is poorly timed, occurring at a critical moment when the project’s fundamentals are severely deteriorating and user activity is near zero.
• Severe Lack of Market Absorption Capacity: WAL’s average daily trading volume is only about $1.4 million. Relative to the unlock size of 32.7 million tokens, market liquidity is clearly insufficient to effectively absorb the new supply, which will create enormous selling pressure.

• Strong Selling Motivation from Unlock Recipients: Based on the linear unlock schedule, this unlock primarily involves investment institutions and the project team. Against the backdrop of a clear project downturn, these holders have a very strong incentive to cash out and are highly likely to sell their tokens.
• Weak Liquidity Depth: The relatively small daily trading volume reflects a severe lack of market depth, which cannot effectively cushion the price impact caused by a large-scale token unlock.

Summary

Walrus faces a fatal commercialization crisis: as a decentralized storage project, its on-chain fees persistently remain at the extremely low level of about $100 per day, indicating near-zero user adoption and failure to validate its core business value. The unlock of 32.7 million WAL tokens on December 1st will create immense selling pressure against the backdrop of thin liquidity (daily average of $1.6 million). The strong incentive of investment institutions and the team to cash out during the project’s downturn further exacerbates the selling risk.

SOMI — Somnia

Project Fundamentals and Positioning

Somnia is a high-performance Layer 1 blockchain built specifically for real-time on-chain applications such as immersive gaming and social networking. Unlike traditional solutions, it avoids sidechains or off-chain workarounds to deliver seamless scalability and low cost. Somnia is EVM-compatible and rooted in gaming and Metaverse innovation, enabling developers to create easily 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 fallen to around $500 per day, a significant drop from historical highs, indicating that user activity is nearly zero and project utilization is severely insufficient.

• Sustained Contraction in DEX Trading Volume: On-chain DEX trading volume shows a continuous downward trend, currently hovering at a low level of only $100,000 per day, reflecting a severe lack of trading demand and ecological liquidity depletion.

• Collapse of Ecosystem Application Revenue: Total revenue from on-chain ecosystem projects is only about $20 per day, showing that the application layer has essentially lost its user base, and the overall ecosystem is stagnant.

• Massive Cross-Chain Fund Withdrawal: Cross-chain TVL has plunged by 96.37% from a high of $2.48 million to $90,000, indicating a severe lack of capital confidence and panic withdrawal.

Token Unlock Risk Assessment

• Unfavorable Scale and Timing: 8.75 million SOMI tokens are scheduled to be unlocked on December 2nd. This large-scale unlock is poorly timed, occurring at a critical moment when the project’s fundamentals are deteriorating across the board.
• Severe Lack of Market Absorption Capacity: SOMI’s average daily trading volume is only about $2 million. Relative to the unlock size of 8.75 million tokens, market liquidity is clearly insufficient to effectively absorb the new supply, which will create enormous selling pressure.
• Strong Selling Motivation from Unlock Recipients: Based on the linear unlock schedule, this unlock primarily involves investment institutions and the project team. Against the backdrop of a clear project downturn, these holders have a very strong incentive to cash out and are highly likely to sell their tokens.
• Weak Liquidity Depth: The relatively small daily trading volume reflects a severe lack of market depth, which cannot effectively cushion the price impact caused by a large-scale token unlock.

Summary

Somnia faces a comprehensive deterioration of its fundamentals: on-chain fees, DEX trading volume, and ecosystem revenue have all plummeted, with cross-chain TVL dropping by 96.37%, and user activity near zero. The unlock of 8.75 million SOMI tokens on December 2nd will create immense selling pressure against the backdrop of thin liquidity (daily average of $2 million). The strong incentive of investment institutions and the team to cash out further exacerbates the selling risk.

STO: Liquidity Distribution Protocol Loses User Trust, Massive Capital Flight Coupled with Unlock Selling Pressure

Project Fundamentals and Positioning

Stakestone is an omnichain liquidity infrastructure designed to transform how liquidity is acquired, distributed, and utilized across various blockchain ecosystems. Unlike POS staking pools and restaking protocols, the platform focuses more on constructing the liquidity distribution for ETH, BTC, and stablecoins. Its core mission is to provide efficient, sustainable, and organic liquidity to meet the needs of the increasingly modular and multi-chain DeFi environment.

Severe Deterioration of Fundamental Data

• Cliff-like Decline in TVL (Total Value Locked): Stakestone’s TVL has sharply dropped from a peak of $341,200$ ETH to $16,400$ ETH, a massive decrease of 95.19%. This reflects a large-scale withdrawal of user funds, indicating a severe loss of project appeal and confidence.

• On-Chain Activity Near Zero: On-chain fees have fallen to an extremely low level of about $10 per day. This significant drop from historical data suggests that user activity has essentially disappeared, and project usage frequency is severely insufficient.

• Capital Flow Exhibits Unidirectional Outflow: For the vast majority of the past year, the project has shown a net capital outflow status. This sustained withdrawal of funds indicates that users have lost confidence in the project, and ecosystem participation continues to deteriorate.

Token Unlock Risk Assessment

• Unfavorable Scale and Timing: 11.74 million STO tokens are scheduled to be unlocked on December 3rd. This large-scale unlock is extremely poorly timed, occurring at a critical moment when the project’s fundamentals are deteriorating across the board.
• Severe Lack of Market Absorption Capacity: The average daily trading volume for STO tokens is only about $700,000. Relative to the unlock size of $11.74$ million tokens, market liquidity is clearly insufficient to effectively absorb the new supply, which will create enormous selling pressure.

• Strong Selling Motivation from Unlock Recipients: Based on the linear unlock schedule, this unlock primarily involves investment institutions and the project team. Against the backdrop of a clear project downturn, these holders have a very strong incentive to cash out and are highly likely to sell their tokens.
• Weak Liquidity Depth: The relatively small daily trading volume reflects a severe lack of market depth, which cannot effectively cushion the price impact caused by a large-scale token unlock.

Summary

Stakestone faces a comprehensive collapse of its fundamentals: TVL has plummeted by 95.19%, on-chain fees have dropped to $10 per day, capital is continuously flowing out unilaterally, and user activity is near zero. The unlock of 11.74 million tokens on December 3rd will create immense selling pressure against the backdrop of thin liquidity (daily average of $700,000). The strong incentive of investment institutions and the team to cash out further exacerbates the selling risk.

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

Market Sentiment Index Analysis

The market sentiment index rose from 30 to 35. This week, BTC was up 4.16% and ETH was up 7.13%, while TOTAL3 saw a 2.72% increase. Overall, the Altcoin segment remains in bearish territory.

Sector Performance

Based on weekly return statistics, the PayFi sector performed the best, while the GameFi sector performed the worst.

PayFi Sector

The PayFi sector saw the best performance. XRP, XLM, BCH, and LTC hold a significant share, totaling 99.22% of the sector’s market capitalization. Their weekly price changes were: 3.18%, 1.01%, 6.69%, and -6.38%, respectively. As observed, most projects in the PayFi sector saw substantial gains, with the majority of projects outperforming those in other sectors, leading to the PayFi sector’s top performance.

GameFi Sector

The GameFi sector showed the weakest performance. IMX, GALA, SAND, MANA, and BEAM hold a large share, totaling 68.57% of the sector’s market capitalization. Their weekly price changes were: -16.12%, -9.58%, -10.21%, -11.09%, and -0.92%, respectively. The major projects were all on a sharp downtrend, which resulted in the GameFi sector’s overall poor performance.

Next Week’s Crypto Major Event Calendar

• Monday (December 1): US ISM Manufacturing PMI for November
• Wednesday (December 3): US ADP Non-Farm Employment Change for November
• Thursday (December 4): US Initial Jobless Claims for the week ending November 29
• Friday (December 5): US Preliminary University of Michigan 1-year Inflation Expectation for December, US Core PCE Price Index Year-over-Year for October

Summary

The cryptocurrency market showed a clear reparative rebound this week, with both BTC and ETH recording gains exceeding 4%. The market sentiment index recovered from 30 to 35, though the aggregate market remains in bearish territory.

The shift in stablecoin market capital flows is particularly noteworthy:

• USDT market cap grew by 0.59% to $184.5 billion, mainly reflecting the risk-off demand from non-U.S. investors.
• The USDC market cap saw a significant increase of 2.15% to $76.0 billion, with a $1.6 billion increase, signaling a positive indication of U.S. investors re-entering the market.

The reversal of institutional fund flows was the core driver of this rebound. Spot ETFs and corporate treasuries ended last week’s massive sell-off and returned to a net buying state. This, combined with the market’s expectation for a December Fed rate cut surging from 30% to over 80%, provided strong support for the repair of market sentiment.

Despite signs of a market rebound, investors must remain highly vigilant. The upcoming release of the US October Core PCE Price Index Year-over-Year and November ADP Employment Change next week will directly influence the probability of a December Fed rate cut. The uncertainty of this data may trigger a new round of market volatility. Of particular concern is the sustainability of institutional purchasing power, which remains questionable. Historical evidence shows that institutional funds often follow market trends and could quickly switch from buying to selling if unfavorable data emerges, forming a negative feedback loop.

Considering the current market environment, investors are advised to adopt a strategy of cautious optimism with a focus on defense. Although market sentiment has begun to recover, there is still significant volatility risk in the short term due to the lag effect of policy transmission and the uncertainty of economic data. Investors should closely monitor the release of core economic data next week, especially the potential impact of the PCE data on Fed policy expectations. In terms of asset selection, it is crucial to avoid projects with deteriorating fundamentals and facing large-scale token unlocks, such as WAL, SOMI, and STO. These projects face significant downside risk in the current environment of thin liquidity.