Crypto Market Weekly Report: Market Panic Intensifies, Focus Shifts to Decentralized Finance and AI Agent Sector

Market Overview

The main trends in the market

The current market is in a state of extreme panic, with the sentiment index plummeting from 53% to 7%. The Fed's hawkish statements have led to a drop 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 seen the first negative growth in TVL 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 pullback, fundamental liquidity continues to flow in, with stable yield projects like liquidity pools being in high demand.

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

The popularity of the Meme coin market has clearly cooled down, with large-scale capital withdrawal. Investors are more inclined to seek projects with substantial application value, which may signal the phase end of the Meme coin craze.

The public chain sector has shown strong resilience during significant market fluctuations, becoming the preferred choice for risk aversion, reflecting the market's continued confidence in infrastructure.

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, following DeFi stable yield and AI infrastructure projects, and being wary of the risk of intensified volatility during the holiday.

( Market Sentiment Index Analysis

• The market sentiment index has dropped from 53% last week to 7%, which is in the extreme fear zone.
• Altcoins performed weaker than the benchmark index this week, experiencing a significant drop. Due to leveraged positions, approximately $1 billion worth of positions were forcibly liquidated, leading to a notable deleveraging of long positions. It is expected that altcoins will temporarily move in sync with the benchmark index, with a low probability of independent market trends.
• Altcoins often experience upward reversals when they are in extreme fear zones.

![Market panic escalates, follow the shift to Decentralized Finance and AI Agent tracks｜Frontier Lab crypto market weekly report])https://img-cdn.gateio.im/webp-social/moments-f26f19c4cbaf590c96458eee9afad5f4.webp###

( Overview of the Overall Market Trends

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

• Decentralized Finance related projects have performed outstandingly, and the market continues to follow the improvement of base returns.

• The AI Agent track project has received high attention this week, and investors are actively looking for the next market breakout point.

• Meme track projects are generally declining, with funds beginning to withdraw, reflecting the gradual decline in market enthusiasm.

Hot Tracks

) AI Agent

This week the market has fallen, and all sectors are in a downward state. Although most tokens in the AI Agent sector have decreased in price, the market discussion is at its peak. The focus has shifted from AI Agent Meme tokens to infrastructure development.

The AI Agent track is likely to lead the future market development, including multiple sub-tracks such as AI Meme, AI DePIN, AI Platform, AI Rollup, and AI infra. The essence of blockchain projects is smart contracts, and AI Agent aims to improve and enhance smart contracts, with a high degree of integration with encryption.

Top five AI Agent projects by market capitalization:

| Project Name | Market Cap ### million USD ### | 24h Price Change | 7d Price Change | |---------|-------------|----------|---------| | WorldCoin | 258.48 | -4.77% | -17.87% |
| Fetch.ai | 580.38 | -5.20% | -19.18% | | SingularityNET | 511.36 | -3.37% | -16.94% | | Ocean Protocol | 247.40 | -4.51% | -18.33% | | Akash Network | 210.67 | -4.78% | -23.16% |

( Decentralized Finance赛道

)# TVL Growth Ranking

The top 5 projects by TVL growth in the past week ### do not include public projects with a smaller TVL, with a standard of over 30 million USD ###:

| Project Name | Weekly Growth Rate | TVL( million USD) | |---------|----------|--------------| | VaultCraft | 5344.32% | 102.41 | | Hyperliquid | 183.98% | 2754.63 |
| Resolv | 77.31% | 131.34 | | Babylon | 64.43% | 5774.49 | | DAO List | 48.52% | 859.86 |

VaultCraft(VCX): The Algorand public chain project aims to reduce storage and network startup costs. This week, the stETH 4X leverage Looper was launched, supporting multi-chain and offering up to 7%+ APY. Collaborated with Matrixport to acquire 1000 BTC custodial business, with TVL rapidly increasing. Strategic partnerships established with Safe and CoWSwap.

Hyperliquid(HYPE): High-performance Decentralized Finance platform, providing perpetual contracts and spot trading. This week, the market experienced significant fluctuations, attracting users to participate in contract trading, with open contracts exceeding $4.3 billion. Multiple popular cryptocurrency trading pairs have been added, supporting up to 5x leverage.

Resolv( not issued coin ): Delta neutral stablecoin project. This week completed Base integration to reduce transaction costs. Launched lending services and liquidity pools, optimizing the reward mechanism. Launched the Grants program to cooperate deeply with multiple projects.

Babylon( unissued tokens ): Projects that enhance the security of other PoS chains by leveraging Bitcoin's security. This week, deepened the application of ZK technology with Layeredge and established a strategic partnership with Sui to promote a modular ecosystem.

Lista DAO(LISTA): Liquidity staking and decentralized stablecoin projects on the BSC chain. This week launched Gauge Voting and Bribe Market features, establishing partnerships with multiple projects. Attract users through high APR and lending rates, and carry out winter activities and airdrops.

(# Overall performance of the track

• The market capitalization of stablecoins is steadily growing: USDT increased by 0.55%, USDC increased by 1.44%, indicating that funds continue to enter.

• Liquidity is gradually increasing: traditional market risk-free arbitrage rates are declining, while on-chain DeFi project arbitrage rates are rising, making a return to DeFi a good choice.

• Funding situation: The TVL of DeFi projects dropped from $54.1 billion to $52.9 billion, a negative growth of 2.21%, mainly due to market decline leading to liquidations. Need to follow the TVL change trend in the next two weeks.

)# In-depth analysis

Driving Force of Increase:

The core driving factors of this round of increase:

• The market enters a bull market cycle, driving an increase in liquidity demand.
• The basic lending interest rate level is rising
• The profit potential of the arbitrage cycle strategy in Decentralized Finance protocols has expanded.

This transmission mechanism strengthens the intrinsic value support within the Decentralized Finance sector, creating a positive growth momentum.

Potential Risks:

The market has continued to rise recently, with investors overly focused on yield and leverage, neglecting the risks of a downturn. After the Federal Reserve unexpectedly adjusted its interest rate cut expectations this week, the market quickly fell, with over $1 billion in contracts and lending assets being liquidated. This could trigger a chain liquidation, further driving down prices.

![Market panic escalates, focus shifts to Decentralized Finance and AI Agent track｜Frontier Lab crypto market weekly report]###https://img-cdn.gateio.im/webp-social/moments-40183066e1913a84216b0233a6b43613.webp###

( Other track performance

) public chain

The top 5 public chains by TVL growth in the past week ### excluding public chains with smaller TVL ###:

| Project Name | Weekly Increase | TVL( million USD) | |---------|----------|--------------| | Hyperliquid | 183.98% | 2754.63 | | Bitcoin | 44.94% | 7021.98 | | BSC | 2.71% | 5793.56 | | AILayer | 2.02% | 219.18 | | Mantle | 0.75% | 489.23 |

Hyperliquid: This week the market has experienced significant fluctuations, attracting users to participate in contract trading, with open interest exceeding $4.3 billion. Multiple new popular cryptocurrency trading pairs have been added, supporting high leverage.

Bitcoin: This week, BTC's decline is relatively small, with users buying for hedging. The BTCFi project has received more funds deposited to earn returns, driving the TVL up.

BSC: Introduced multiple new projects to promote the integration of AI and Web3 in the gaming sector. Strongly supports the development of Meme projects, launching airdrops and competition activities.

AILayer: Focused on community operations and ecological cooperation, hosting multiple interactive activities. Showcasing the vision of the integration of AI and blockchain.

Mantle: Achieved significant breakthroughs by integrating Compound III, launching lending features. Expanded the Scout program and launched a large incentive campaign to attract a large number of users to participate.

( Overview of the Rise List

The top 5 tokens with the highest increase in the market over the past week ) do not include tokens with very low trading volume and meme coins ###:

| Token | Project Name | 7-Day Price Change | Circulating Market Cap | Circulation Rate | |------|--------|----------|---------|-------| | UXLINK | UXLINKl | 107.18% | $202,170,534 | 17.01% | | USUAL | Usual | 74.72% | $551,884,166 | 96.89% | | MOCA | Moca Network | 72.37% | $230,592,827 | 17.37% | | HYPE | Hyperliquid | 52.43% | $9,050,605,832 | 33.39% | | VELO | Velodrome Finance | 47.49% | $195,966,876 | 45.42% |

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

UXLINK: Collaborating with DuckChain to build a social growth layer, users exceed 2 million. Launching a large-scale airdrop event to attract new users.

USUAL: Launch innovative incentive vaults and strategies, offering high APY. TVL is growing rapidly, and the tokens are experiencing a deflationary effect.

MOCA: Released version 3.0, introducing the concept of "integrated accounts". Collaborated with SK Planet to reach the South Korean user base.

HYPE: Market volatility attracts users to participate in contract trading, with a significant increase in open contracts. Multiple trading pairs have been added to support high leverage.

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

( Meme Token Price Increase Ranking

| Token | Project Name | Weekly Increase | Circulating Market Cap | Associated Public Chain | |------|--------|----------|---------|--------| | FARTCOIN | Fartcoin | 96.66% | $1,042,961,684 | Solana | | AIXBT | aixbt by Virtuals | 18.83% | $274,894,511 | BSC | | CHEEMS | Cheems Token | 8.58% | $205,254,035 | BSC |

This week, Meme projects have been significantly affected by the market downturn, performing worse than the overall market. It is evident that the current market attention and funds are not concentrated on the Meme coin sector.

![Market panic escalates, attention shifts to Decentralized Finance and AI Agent tracks｜Frontier Lab crypto market weekly report])https://img-cdn.gateio.im/webp-social/moments-5a157c17f1e3c1d653a5955ba445db9d.webp###

( social media hotspot

This week, the most frequently occurring theme is L1s, with the following tokens listed: )12.14-12.20###.

| Token | Market Cap ( billion ) | FDV ( billion ) | Circulation Rate | Weekly Change | |------|---------|---------|-------|----------| | HBAR | 111.1621 | 145.3146 | 76.49% | -1.56% | | SUI | 132.4688 | 452.4736 | 29.27% | -4.25% | | XRP | 136.0616 | 237.8892 | 57.19% | -2.38% | | ETH | 4434.4717 | 4434.4717 | 100.00% | -6.72% | | TRX | 227.7421 | 227.7421 | 100.00% | -13.37% | | CRO | 49.1025 | 54.2489 | 90.51% | -4.93% | | AVAX | 174.7029 | 191.0429 | 91.44% | -15.03% | | ONDO | 27.1363 | 188.7985 | 14.37% | 2.73% | | OM | 37.8849 | 71.7898 | 52.77% | -4.43% | | QNT | 17.0345 | 17.1145 | 99.53% | -18.71% | | DOT | 115.9881 | 115.9881 | 100.00% | -17.97% |

Analysis shows that the most followed projects on social media this week are L1s. When the market fell sharply, various public chains performed well. In addition to buying BTC and ETH for hedging, investors have directed more funds towards various public chains, expecting them to rebound before other projects after the decline ends.

( Overall Overview of Market Themes

| Track | Weekly Return Rate | Monthly Return Rate | Quarter