Market Trend Analysis and Outlook

Market Overview

The current market is in a state of extreme panic, with the sentiment index dropping from 53% to 7%. The Fed's hawkish stance has reduced interest rate cut expectations from 4 times to 2 times, triggering about $1 billion in forced liquidations, indicating that the market is undergoing a significant deleveraging process.

The DeFi sector has seen its first negative TVL growth in nearly two months (-2.21%), but the market value of stablecoins continues to grow (USDT +0.55%, USDC +1.44%). This indicates that despite market corrections, underlying liquidity is still flowing in, and stable yield projects like liquidity 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 popularity of Meme coins has clearly cooled down, with large-scale withdrawals of funds indicating a decrease in market speculative sentiment. Investors are more inclined to seek projects with substantial application value. This may signify the end of the Meme coin craze phase.

The public chain sector has shown strong resilience against declines amid significant market fluctuations, becoming the preferred choice for risk aversion, reflecting that market confidence in infrastructure remains solid.

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 paying attention to DeFi stable returns and AI infrastructure projects. Be wary of the increased risk of volatility during the holidays.

Hot Topics

( AI Agent

The AI Agent track has the highest discussion level, with market attention shifting from AI Meme tokens to infrastructure development. AI Agent is expected to lead the next stage of market development, covering multiple directions such as AI DePIN, AI Platform, AI Rollup, and AI infra.

AI Agents are closely integrated with blockchain, essentially representing a form of smart contracts. AI Agents aim to enhance and improve smart contracts, integrating well with the crypto ecosystem.

![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-40183066e1913a84216b0233a6b43613.webp###

( DeFi track

This week's projects with rapid TVL growth are mainly concentrated in the stablecoin yield sector ) Gun Pool ###. Notable projects include:

• VaultCraft: Launching stETH 4X leverage Looper, supporting multi-chain deployment, offering up to 7%+ APY
• Hyperliquid: Contract trading volume surges, open contracts exceed $4.3 billion
• Resolv: Integrated with Base to reduce transaction costs and increase speed
• Babylon: Deepen the application of ZK scalability technology and promote a modular ecosystem.
• DAO List: Launch of Gauge Voting and Bribe Market features

The market value of stablecoins is steadily increasing, with USDT up 0.55% and USDC up 1.44%, indicating a continuous influx of funds.

The TVL of DeFi projects experienced a negative growth of 2.21%, breaking the upward trend seen in the past two months, primarily affected by liquidations triggered by a market downturn.

Performance in Other Tracks

( public chain

The public chain sector has shown resilience, becoming a safe-haven choice. Notable projects to pay attention to:

• Hyperliquid: Contract trading volume surges, adding multiple popular cryptocurrency trading pairs
• Bitcoin: Hedge demand drives TVL increase
• BSC: Introduce new projects and actively promote the integration of AI and Web3 games.
• AILayer: Hosting community events to showcase the vision of the integration of AI and blockchain
• Mantle: Integrating Compound III, launching a large incentive campaign

) Meme Token

The overall performance of Meme coins is sluggish, failing to follow the market's rise, and subsequently experiencing a significant drop. This shows that current market attention and funds are no longer in the Meme track.

Market Outlook

• Macroeconomic factors: Next week will enter the U.S. Christmas holiday, and market volatility may increase.
• Sector Rotation: DeFi gun pool projects are gaining attention, and the AI Agent track continues to develop.
• Investment Advice:

1. Maintain a defensive allocation, increase allocations in top assets like BTC and ETH.
2. Participate in high-yield gun pool DeFi projects
3. Remain cautious, strictly control positions, and manage risks effectively.

![Market panic escalates, focus shifts to DeFi and AI Agent track｜Frontier Lab Crypto Market Weekly Report]###https://img-cdn.gateio.im/webp-social/moments-b110b67bcb0cef7713f870838ea6c79d.webp###