Crypto Market Weekly: Market Panic Intensifies, DeFi and AI Agents Become the Focus

Market Overview

Market Main Trends

The market is currently in a state of extreme panic, with the sentiment index plummeting from 53% to 7%. The Federal Reserve's hawkish stance has triggered approximately $1 billion in forced liquidations, and the market is undergoing a significant deleveraging process.

The DeFi sector's TVL has experienced negative growth for the first time in nearly 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, the underlying liquidity is still flowing in, with projects like the machine gun pool being favored.

The market size of the AI Agent track has reached 9.9 billion USD, 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 popularity of Meme coins has clearly cooled down, with funds beginning to withdraw on a large scale, indicating a decrease in market speculation sentiment. Investors are more inclined to seek projects with substantive value, which may mark a phase of the end of the Meme coin craze.

During significant market fluctuations, the public blockchain sector has shown strong resilience against declines, becoming the preferred choice for investors seeking safe havens, reflecting the market's continued confidence in infrastructure.

As the Christmas holidays approach, market liquidity is expected to decline. It is recommended to 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 potential risk of increased volatility during the holiday period.

Market Sentiment Index Analysis

• The market sentiment index has dropped from 53% last week to 7%, falling into the extreme fear zone.
• Altcoins performed weaker than the benchmark index this week, showing a significant downtrend. Affected by leveraged positions, the market saw forced liquidations of over $1 billion in positions, leading to a notable deleveraging of long positions. It is expected that Altcoins will align with the benchmark index in the short term, with a low probability of independent market movements.
• Altcoins often experience upward reversals when they are in extreme fear zones.

Overview of the overall market trend

• The crypto market is in a downward trend this week, with the sentiment index in extreme fear.

• Projects related to DeFi have performed outstandingly, demonstrating the market's continued attention to improving base yields.

• The AI Agent track project has seen high public sentiment this week, indicating that investors are actively looking for the next market breakout point.

• This week, Meme projects have generally declined, with funds beginning to withdraw, reflecting a gradual decrease in market enthusiasm.

Hot Tracks

AI Agent

This week, the market is in a downward trend, with all sectors declining. Although the token prices in the AI Agent sector have also fallen, it remains the most discussed topic in the market. The focus has shifted from AI Agent Meme tokens to infrastructure development.

The AI Agent track is likely to lead the next market development, as it includes not only AI Meme but also AI DePIN, AI Platform, AI Rollup, AI infra, and several other tracks. Essentially, blockchain projects are all forms of smart contracts, and the birth of AI Agent is aimed at improving and enhancing smart contracts. AI Agent and crypto are a great combination.

The top five AI Agent projects by market capitalization:

1. Worldcoin (WLD)
2. Fetch.ai (FET)
3. SingularityNET (AGIX)
4. Ocean Protocol (OCEAN)
5. Akash Network (AKT)

Decentralized Finance赛道

TVL Growth Ranking

The top 5 projects with the largest TVL increase in the past week, excluding smaller projects not counted in TVL, with a standard of over 30 million USD: (.

1. VaultCraft: 5344.32%
2. Hyperliquid: 183.98%
3. Resolv: 77.31%
4. Babylon: 64.43%
5. DAO List: 48.52%

VaultCraft )VCX(:

• Project Introduction: A public chain project based on Algorand, aimed at reducing storage and network startup costs.
• Latest developments: Launched the stETH 4X leverage Looper based on Lido Finance, supporting multi-chain deployment and offering 7%+ APY returns. Partnered with Matrixport to secure 1000 BTC custody business, with TVL rapidly increasing. Established strategic partnerships with Safe and CoWSwap.

Hyperliquid )HYPE(:

• Project Introduction: High-performance Decentralized Finance platform, focusing on perpetual contracts and spot trading.
• Latest developments: Market volatility has created a favorable trading environment, with open contracts exceeding $4.3 billion. New leverage trading features for multiple popular cryptocurrencies have been added to attract user participation.

Resolv ) not issued coin (:

• Project Introduction: Delta Neutral Stablecoin Project, focusing on the tokenization of market-neutral investment portfolios.
• Latest developments: Completed Base integration, launched lending services through Euler Finance, and liquidity pools on Aerodrome. Launched the Grants program and confirmed the first recipients.

Babylon ) Unissued Token (:

• Project Introduction: A project that enhances the security of other PoS chains using the security of Bitcoin.
• Latest developments: Deepening ZK scalability technology applications in collaboration with Layeredge, establishing a strategic partnership with Sui to advance the construction of a modular ecosystem.

Lista DAO )LISTA(:

• Project Introduction: A liquidity staking and decentralized stablecoin project based on BSC.
• Latest developments: Launched Gauge Voting and Bribe Market features, and established partnerships with 48Club_Official and others. Attracting users with weekly rewards of approximately $230,000 in veLISTA and high APR incentives.

)# Overall performance of the track

• The market capitalization of stablecoins is steadily increasing: USDT up 0.55%, USDC up 1.44%, indicating a continuous influx of capital.

• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets are declining, while the arbitrage rates for on-chain Decentralized Finance projects are increasing. Returning to DeFi will be a good choice.

• Capital situation: The TVL of DeFi projects decreased from $54.1 billion to $52.9 billion, a negative growth of 2.21%, mainly due to market decline leading to liquidations. In the next two weeks, attention should be focused on the overall changes in TVL, monitoring whether the downward trend continues.

In-depth Analysis

Upward driving force:

• Market Environment: The bull market cycle brings an overall increase in liquidity demand
• Interest rate side: The base lending rate has risen, reflecting the market's expectations for the pricing of funds.
• Yield side: The yield rate of the cyclic arbitrage strategy has increased, and the endogenous yield of the protocol has significantly improved.

Potential risks: The continuous rise of the market has led investors to ignore the risks of a downturn. This week, the Federal Reserve's adjustment of interest rate cut expectations triggered a rapid decline, with over $1 billion in contracts and lending assets being liquidated. The risk of liquidation may lead to a chain reaction of liquidations, further driving down prices.

Other track performance

public chain

The top 5 public chains by TVL growth in the past week:

1. Hyperliquid: 183.98%
2. Bitcoin: 44.94%
3. BSC: 2.71%
4. AILayer: 2.02%
5. Mantle: 0.75%

Hyperliquid: The market is highly volatile, creating a good trading environment, with open contracts exceeding $4.3 billion. New leverage trading features for multiple popular cryptocurrencies have been added.

Bitcoin: During the market decline, BTC has seen a smaller drop, and users are buying it as a hedge. Users are more optimistic about BTC's future development and are depositing into the BTCFi project to earn additional returns.

BSC: Introduce new projects, promote the integration of AI and Web3 in the gaming sector, support the development of Meme projects, and launch the Meme Innovation competition.

AILayer: Focuses on community operations and ecological cooperation, hosting multiple interactive activities to enhance user participation.

Mantle: Achieved significant breakthroughs by integrating Compound III, launching multiple incentive activities to attract a large number of users.

Overview of the Rise List

Top 5 tokens with the highest gains in the market over the past week:

1. UXLINK: 107.18%
2. USUAL: 74.72%
3. MOCA: 72.37%
4. HYPE: 52.43%
5. VELO: 47.49%

This week's list of gainers shows a concentrated sector characteristic, with most of the rising tokens belonging to the public chain track.

UXLINK: Reached a strategic partnership with DuckChain and received investment support. The number of LINE platform users has surpassed 2 million, launching a large-scale airdrop event.

USUAL: Launched innovative incentive strategies to provide high APY returns. TVL is growing rapidly, and the token USUAL is experiencing a deflationary effect.

MOCA: Released Moca 3.0 version, introducing the concept of "integrated account." Collaborated with SK Planet to integrate into the OK Cashbag application.

HYPE: The market is highly volatile, creating a favorable trading environment, with open contracts exceeding $4.3 billion. New leverage trading features for multiple popular cryptocurrencies have been added.

VELO: Collaborating with Sony Block Solutions Labs to expand into new Layer 2 solutions. Significant progress made in liquidity building.

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)# Meme Token Price Increase Ranking

1. Fartcoin ###FARTCOIN(: 96.66%
2. aixbt by Virtuals )AIXBT(: 18.83%
3. Cheems Token )CHEEMS(: 8.58%

This week, Meme projects have been significantly affected by the market downturn, with very few Meme coins experiencing an increase. At this stage, market attention and funds are not focused on the Meme coin sector.

)# social media hotspot

The most frequently occurring themes are L1s, with listed tokens including HBAR, SUI, XRP, ETH, TRX, etc.

This week, the most关注 on social media is the L1s projects. When the market is down, various public chains perform better than other sectors. In addition to buying BTC and ETH for hedging, most investors are investing in various public chains. After the decline ends, various public chains generally rise before other projects.

Overall Market Overview

According to weekly return rate statistics, the CeFi sector performed the best, while the GameFi sector performed the worst.

• CeFi track: BNB and BGB account for a large proportion, totaling 91.52%. Binance continues to introduce new coins to attract traffic, with BNB performing better than the market. Bitgit shows impressive performance, with BGB rising against the trend by 37.93%.

• Gamefi sector: has not received market attention and lacks wealth creation effect. The main tokens in the sector performed worse than the overall market, resulting in the poorest overall performance.

Next Week's Major Events in the Crypto Market

• December 26 ### Thursday (: The number of initial jobless claims in the United States for the week is announced.

Outlook for Next Week

) Macroeconomic Factors Analysis

• As the Christmas holiday approaches in the United States, there is less macro data being released.
• In previous Christmas and New Year holidays, the market, driven by buyers from the United States, experienced a decline in purchasing power and increased market volatility.

sector rotation trend

• DeFi sector: Investors expect the market to rise in the first quarter of next year and are reluctant to sell their tokens. To increase returns, they are actively participating in machine gun pool projects.

• AI Sector: The AI Agent track continues to attract attention, with a market size reaching $9.9 billion. The integration of Web2 and Web3 ecosystems is accelerating, and the integration process of AI Agents with existing encryption products is speeding up.

investment strategy recommendations

• Maintain a defensive allocation, increase BTC and ETH allocation, enhance asset hedging attributes.
• Participate in high-yield machine gun pool Decentralized Finance projects to hedge risks
• Be cautious, strictly control your positions, and manage risks effectively.

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