Market Overview and Hotspot Analysis

Main Market Trends

Market Overview

The current market is in a state of extreme panic, with the sentiment index dropping from 53% to 7%. The Federal Reserve's hawkish statements have caused interest rate cut expectations to drop from 4 times to 2 times, triggering approximately $1 billion in forced liquidations, and the market is undergoing a significant deleveraging process.

DeFi ecosystem development

The DeFi sector has experienced a negative growth in TVL 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% ). Despite the market pullback, fundamental liquidity continues to flow in, and projects with stable returns like liquidity pools are in high demand.

AI Agent

The market size of the AI Agent sector has reached 9.9 billion USD. The focus of investment has shifted from speculative AI Meme coins to infrastructure construction, indicating that the market is gradually maturing, with project directions becoming more rational and practical.

Meme Coin Trend

The enthusiasm for the Meme coin market has significantly cooled down, with a large-scale withdrawal of funds. Investors are more inclined to seek projects with substantial application value, which may indicate a phase of the Meme coin craze coming to an end.

Public Chain Performance Analysis

The public blockchain sector has shown strong resilience amid significant market fluctuations, becoming the top choice for investors seeking refuge, reflecting the market's continued confidence in infrastructure.

Future Market Outlook

As the Christmas holiday approaches, market liquidity is expected to decrease. It is recommended to adopt a defensive allocation strategy, focusing on BTC and ETH, while paying attention to DeFi stable yield and AI infrastructure projects, but be wary of the 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 underperformed the benchmark index this week, showing a significant downward trend. Due to leveraged positions, the market experienced forced liquidations of over $1 billion, with 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 trends.
• Altcoins often experience upward reversals when they are in an extreme panic zone.

Overview of Overall Market Trends

• The cryptocurrency market is in a downtrend this week, with the sentiment index at extreme fear.
• Defi-related cryptocurrency projects have performed outstandingly, showing the market's continued focus on enhancing basic yields.
• AI Agent track projects have received high public attention this week, indicating that investors are starting to look for the next market breakout point.
• This week, Meme track projects have generally declined, with funds starting to withdraw, reflecting the market's waning enthusiasm for Meme coins.

Hot Tracks

AI Agent

This week, the overall market is in a downward trend, with all sectors declining. The token prices in the AI Agent sector have also dropped, but it is the most discussed in the market. Previously, the focus was on AI Agent Meme tokens, but now it has shifted to the infrastructure development of AI Agents.

The AI Agent track may lead the upcoming market development, as it includes multiple tracks such as AI Meme, AI DePIN, AI Platform, AI Rollup, and AI infra. The combination of AI Agent and Crypto can enhance the improvement of smart contracts.

DeFi track

TVL Growth Ranking

The top 5 projects by TVL growth in the past week ( TVL > 30 million USD ):

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

Overall performance of the track

• The market capitalization of stablecoins is steadily increasing: USDT +0.55%, USDC +1.44%. Funds from both non-U.S. and U.S. markets continue to enter.
• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets are declining, while the arbitrage rates in on-chain DeFi projects are increasing. Returning to DeFi will be a good choice.
• Fund Status: The TVL of Defi projects has decreased from 54.1 billion USD to 52.9 billion USD, marking the first negative growth in nearly two months ( -2.21% ). The main reason is the significant market decline this week, which forced the liquidation of contracts and loans. The changes in TVL should be the focus in the coming two weeks.

In-depth Analysis

Upward driving force:

• Market Environment: Bull market cycles lead to an increase in overall liquidity demand
• Interest rate side: The base lending rate has been raised, reflecting the market's expectations for fund pricing.
• Earnings side: The yield of the cyclical arbitrage strategy has expanded, and the endogenous income of the protocol has significantly improved.

Potential risks: The market has recently risen, and investors are paying more attention to yields and leverage while ignoring the risks of a downturn. The adjustment of the Federal Reserve's policy has triggered a rapid decline, resulting in over $1 billion in contracts and lending assets being liquidated. The risk of liquidation may lead to a chain reaction of liquidations, further lowering prices.

Other track performance

Public Chain

The top 5 public blockchain TVL increases in the past week:

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

Overview of the Rise List

Top 5 tokens by market gain in 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 gainers list shows a characteristic of sector concentration, with most of the rising tokens belonging to the public chain track.

Meme Token Price Increase Ranking

1. FARTCOIN: 96.66%
2. AIXBT: 18.83%
3. CHEEMS: 8.58%

This week, the Meme projects have been significantly affected by the market downturn, and there has been little upward momentum. It is明显可见that the current market attention and funds are not focused on the Meme coin track.

Social Media Hotspot

This week, the most frequent topic is L1s, appearing (12.14-12.20).

Overall Overview of Market Themes

Weekly return rates show that the CeFi sector performed the best, while the GameFi sector performed the worst.

Outlook for Next Week

Macroeconomic Factors Analysis

• Next week marks the start of the Christmas holiday in the United States, with fewer macro data releases.
• In previous Christmas and New Year holidays, the purchasing power of the market, primarily driven by the United States, decreased, and market volatility increased.

Sector Rotation Trend

• DeFi track: Investors expect a market-wide rally in the first quarter of next year, participating in machine gun pool projects to increase returns.
• AI Sector: The AI Agent track continues to attract attention, with a market size reaching 9.9 billion USD.

investment strategy advice

• Maintain a defensive allocation, increase BTC and ETH allocation, enhance asset hedging attributes.
• Participate in high-yield gun pool Defi projects
• It is advisable to remain cautious, strictly control positions, and manage risks effectively.