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Market panic intensifies as institutional investors turn to BTC and Decentralized Finance for hedging.
Market Overview
Main Market Trends
The current market is in a state of extreme panic, with the sentiment index dropping sharply from 53% to 7%. The Federal Reserve's hawkish statements have led to a reduction in interest rate cut expectations from 4 times to 2 times, triggering about $1 billion in forced liquidations, and the market is undergoing a significant deleveraging process.
The DeFi sector has experienced its first negative growth in TVL in the past two months (-2.21%), but the market capitalization of stablecoins continues to grow (USDT +0.55%, USDC +1.44%), indicating that despite the market correction, fundamental liquidity is still flowing in, and projects with stable returns like machine gun pools are in high demand.
The market size of the AI Agent track has reached $9.9 billion, with investment focus shifting from speculative AI Meme coins to infrastructure construction, indicating that the market is gradually maturing, and project directions are becoming more rational and practical.
The market heat for Meme coins has obviously cooled down, with a large-scale withdrawal of funds, indicating a decrease in speculative sentiment. Investors are more inclined to search for projects with substantial application value, which may signal a phase of the Meme coin craze coming to an end.
The public chain sector has shown strong resilience during significant market fluctuations, becoming the preferred choice for investors seeking safe havens, reflecting the market's continued confidence in infrastructure.
As the Christmas holiday approaches, market liquidity is expected to decline. It is recommended that investors adopt a defensive allocation strategy, focusing on BTC and ETH, while also paying attention to DeFi stable yield and AI infrastructure projects. However, one should be wary of the increased volatility risks that may occur during the holiday period.
Market Sentiment Index Analysis
The market sentiment index has dropped from 53% last week to 7%, signaling extreme fear. Altcoins have performed worse than the benchmark index this week, showing a significant downward trend. Due to leveraged positions, the market has seen about over $1 billion in forced liquidations, with long positions significantly deleveraging. Given the current market structure, it is expected that Altcoins will remain in sync with the benchmark index in the short term, with a low probability of independent market trends.
Altcoins often experience upward reversals when they are in a state of extreme panic.
Overview of Overall Market Trends
The cryptocurrency market is in a downward trend this week, with the sentiment index in extreme fear.
DeFi-related crypto projects have performed outstandingly, demonstrating the market's ongoing focus on enhancing fundamental yields.
The AI Agent track project has seen a high level of public sentiment this week, indicating that investors are actively looking for the next market breakout point.
This week, Meme projects generally fell, and funds began to withdraw, reflecting a gradual decline in market enthusiasm for Meme coins.
Hot Tracks
AI Agent
This week, the market is in a downtrend, with all sectors declining. Although most token prices in the AI Agent sector have also fallen, it remains the most discussed topic in the market. Previously, the focus on AI Agent was concentrated on meme token projects associated with AI Agents, but it is now slowly shifting towards the infrastructure construction of AI Agents.
Due to the lack of market interest in traditional VC coin projects during this cycle, and the inability of Meme coin projects to bring sustained growth, the AI Agent sector is likely to lead the market development ahead, as it includes not only AI Meme but also various sectors such as AI DePIN, AI Platform, AI Rollup, and AI infra, all of which can be integrated with AI Agent. Essentially, all blockchain projects are manifestations of smart contracts, and the emergence of AI Agent is aimed at improving and enhancing smart contracts. Therefore, AI Agent and Crypto are the best combination.
DeFi track
TVL Growth Ranking
The top 5 projects by TVL growth in the past week, excluding projects with a smaller TVL, with a benchmark of over 30 million USD (:
VaultCraft)VCX(: Launches Lido Finance based stETH 4X leverage Looper, supports multi-chain deployment, offers up to 7%+ APY returns, and collaborates with Matrixport to secure 1000 BTC custody business, with TVL rapidly increasing. At the same time, strategic partnerships have been established with Safe and CoWSwap.
Hyperliquid)HYPE(: This week's market volatility has created a favorable environment for contract trading, attracting a large number of users to participate in trading, with open interest exceeding $4.3 billion. Multiple new popular cryptocurrency trading pairs have been added, supporting up to 5x leverage.
Resolv: Completed integration with Base, significantly reducing transaction costs and improving speed, launched lending services through Euler Finance, introduced liquidity pools on Aerodrome, adjusted yield point mechanisms, and initiated the Grants program.
Babylon: Deepening the application of ZK scalability technology through collaboration with Layeredge, establishing a strategic partnership with Sui to promote the construction of a modular ecosystem.
DAO List: Launching Gauge Voting and Bribe Market features, establishing strategic partnerships with 48Club_Official and others to promote PumpBTC as an innovative collateral integration. Approximately $230,000 veLISTA rewards distributed weekly, with winter activities underway.
In summary, this week's projects with rapid TVL growth are mainly concentrated in the stablecoin yield sector ) Gun Pool (.
)# Overall Performance of the Track
Stablecoin market cap steadily grows: USDT up 0.55%, USDC up 1.44%. Despite the market downturn, both USDT and USDC have increased, indicating that the overall market continues to see a steady influx of funds.
Liquidity is gradually increasing: The risk-free arbitrage rate in traditional markets continues to decline due to interest rate cuts, while the arbitrage rate of on-chain DeFi projects has increased due to the rise in the value of crypto assets. Returning to DeFi will be a good choice.
Funding Situation: The TVL of DeFi projects has decreased from $54.1 billion to $52.9 billion, marking the first negative growth of 2.21% in the past two months, mainly due to a significant market decline that forced the liquidation of contracts and loans. In the next two weeks, attention should be focused on the overall changes in TVL and whether the downward trend continues.
![Market panic escalates, attention shifts to DeFi and AI Agent track|Frontier Lab Crypto Market Weekly]###https://img-cdn.gateio.im/webp-social/moments-5a157c17f1e3c1d653a5955ba445db9d.webp(
) Other track performance
public chain
The top 5 public chains by TVL increase in the past week ### excluding public chains with relatively small TVL (:
Hyperliquid: The market's extreme volatility attracts a large number of users to participate in trading, with open contracts exceeding $4.3 billion. Multiple popular cryptocurrency trading pairs have been added, supporting up to 5x leverage.
Bitcoin: The market is down, but the decline is relatively small. Users are buying BTC to hedge against risks, and at the same time, they are more confident in holding for the future. They choose BTCFi projects to earn additional returns, resulting in an increase in TVL.
BSC: Introduce new projects to join the ecosystem, promote the integration of AI and Web3 in the gaming field, support the development of Meme projects, launch airdrop plans and innovative competitions.
AILayer: Focused on community operations and ecological cooperation, hosting interactive activities and AMAs, showcasing the vision of combining AI with blockchain.
Mantle: Integrating Compound III to implement $USDe lending functionality, expanding the Scouts Program, launching the Meetup plan and large incentive activities to attract a large number of users to participate.
) Overview of the Price Increase Rankings
The top 5 tokens with the highest price increase in the past week ### exclude tokens with too low trading volume and meme coins (:
This week's gainers show a concentrated sector characteristic, with most of the rising tokens belonging to the public chain track.
UXLINK: Reached cooperation with DuckChain and received investment, launching a large-scale airdrop event, with the number of users exceeding 2 million.
USUAL: Launch innovative incentive vaults and strategies, providing high APY returns and rapid growth in TVL.
MOCA: Released version 3.0, reached an important cooperation with SK Planet, and will soon be listed on major exchanges in South Korea.
HYPE: Market fluctuations attract users to participate in trading, with open contracts exceeding $4.3 billion and multiple new trading pairs added.
VELO: Progress made in liquidity building in collaboration with Sony Block Solutions Labs.
) social media hotspot
This week, the most frequently mentioned topic is L1s with ###12.14-12.20(. Among the listed tokens, HBAR, SUI, XRP, ETH, TRX, CRO, AVAX, ONDO, OM, QNT, and DOT are receiving a lot of attention.
The most关注ed project on social media this week is the L1s project. After a significant market decline, the drop in various public chains is relatively small. When the market declines, public chains usually perform better, and investors tend to allocate funds to various public chains besides BTC and ETH. When the decline ends and the market rises, public chains often rise before other projects.
) Overall Overview of Market Themes
Weekly return rate statistics show that the CeFi sector performed the best ### -6.61% (, while the GameFi sector performed the worst ) -26.37% (.
Cefi sector: BNB and BGB account for 91.52%. Binance continuously introduces new coins, attracting traffic. BNB performs better than the market. Bitgit lists hot tokens, and BGB rises against the trend by 37.93%.
Gamefi sector: The attention in this round of the cycle is low, lacking wealth creation effect. IMX, BEAM, GALA, SAND, and AXS account for 82.14%, underperforming the market.
![Market panic escalates, attention shifts to DeFi and AI Agent track|Frontier Lab Crypto Market Weekly Report])https://img-cdn.gateio.im/webp-social/moments-b110b67bcb0cef7713f870838ea6c79d.webp(
Outlook for Next Week
) Macro Factors Assessment
Sector Rotation Trend
Investment Strategy Recommendations