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Crypto Market Sentiment is Sluggish: Stablecoin Growth Shows Repatriation of Funds |
Market Overview
Overall overview of the market
This week, the cryptocurrency market is in a volatile downward trend, with the market sentiment index falling from 11% to 8%. The market value of stablecoins has basically begun to grow rapidly (USDT reached 142.7 billion and USDC reached 57.2 billion, an increase of 0.49% and 2.32%, respectively), indicating that institutional funds have re-entered the market, of which the growth rate of US funds is the mainstay, and it can be seen that after two weeks of decline, US investors have begun to enter the market again; Although the release of the data and the release of the Federal Reserve's unveiling book gradually dispelled the market's fears of a recession in the United States, and the market began to gradually price in three Fed rate cuts this year and the beginning of interest rate cuts in May, it did not ease the market sentiment, but due to the recent repeated policy changes caused by strong fluctuations in the price of Bitcoin, the market sentiment became more panicked, and Altcoin's performance was generally weaker than the benchmark index.
Forecast the underlying for the next week
BTC: The recent trend of the BTC and Crypto industries has been weak, mainly because: on the macro level, the implementation of Trump's tariff policy has led to the concern of investors in the market about the future rise in US inflation, and the decline in US GDP expectations may trigger a short-term recession, the shelving of the US-Ukraine mining agreement, and the uncertainty of the Fed's future interest rate cuts; In BTC itself, the price of BTC has been maintained at a high level in the past two months, and some long-term holders and some whales have begun to sell gradually at a high level, but there is no new positive and follow-up capital replenishment in the market, and the Bitcoin strategic reserve signed by Trump is not as expected by the market, so the price of BTC has begun to fall sharply in the near future, and with the sharp decline in the price of BTC, it has caused panic selling by market users, and institutions led by BlackRock continue to sell. There are two main reasons for the bullishness: there have been some changes on the macro level, due to the release of the data and the release of the Fed's unveiling book, the market has gradually eliminated the fear of a recession in the United States, and the market has begun to price in three Fed rate cuts this year and in May; On BTC itself, after a rapid decline, there was a panic sell-off, and according to the on-chain data, most holders did not sell in this decline and began to gradually absorb chips, so as to be optimistic about the trend of BTC next week.
S: Although this week's S token ended its strong trend in recent weeks and followed the broader market down, Sonic's fundamentals have not changed, and Sonic's TVL for the week is still in a growth trend, with an increase of 9.23%. Major Defi projects on the Sonic chain also saw growth this week. In addition, the APY provided by Defi on the Sonic chain to users has not decreased, and is still maintained at a high level, and the main liquidity staking project Beets on the chain, the APY of the liquidity pool based on S tokens can be up to about 30%, which is basically the same as last week's level, and the average interest rate of user loans in the lending protocol on the Sonic chain is about 14%, which is an increase from 10% last week, which proves the increase in on-chain lending. And it has been observed that the daily revenue on the Sonic chain is 210,000 US dollars, ranking 6th among all public chains, much higher than other public chains with the same TVL. Therefore, it can be concluded that the fall in the price of the S token this week is not due to the problem of the project itself, but more because it follows the trend of the broader market price. Since Sonic's fundamentals haven't changed, its bullish logic remains.
AAVE: AAVE bucked the trend this week, rising 21.38% for the week, ranking among the top 50 coins by market capitalization. And Aave's TVL performance is outstanding, with a growth rate of 5.86% this week, ranking second among the top 20 Defi projects in TVL, second only to Infrared Finance on Berachain. Aave's popularity this week was mainly due to its optimization of governance and tokenomics models (buying back tokens, increasing staking rewards, optimizing liquidity) and the White House's support for the repeal of DeFi transaction reporting rules, reducing the compliance burden and spurring innovation. Although it is only a proposal at the moment, with Aave's strong financial position and pro-innovation attitude, the proposal should be realized, and Aave's buyback proposal this time may promote a round of buyback boom in the Defi industry, bringing a touch of vitality to the currently dormant industry, so it is very optimistic about the development of Aave in the future.
BERA: This week, the BERA token, like the S token, ended its strong trend in recent weeks and went down, but Berachain's on-chain data and fundamentals have not changed, and it has achieved upward growth on various data. This week, the growth rate of the TVL of the top DEX, Lending, and LSD projects in the Berachain ecosystem has slowed down this week, mainly due to the growth of the LSD project Infrared Finance and the DEX project BEX, which can reach 31.15% and 25.22% respectively, mainly because Infrared Finance has stabilized the APY of WBERA at around 120%, and BEX has stabilized the APY of the stablecoin pool Stable at around 16%, investors are still in a panic mood in the current market, and the stable income of high interest rates is still very attractive to investors. At the same time, the interest rate of the lending program Dolomite to the borrower is as high as 48.08%, which increases the demand for BERA from users. Therefore, it can be seen that the decline in the price of the BERA token is mainly due to the influence of the market environment, not the change in the Berachain project itself, so the logic of the rise of the BERA token still exists.
APE: APE is the governance and utility token of the Bored Ape community and related communities, used to empower and incentivize decentralized community building at the forefront of web3, while APE also becomes a utility token or currency in web3 projects such as games and virtual worlds. It can be seen that the main tracks involved in APE are NFT and Gamefi, however, in this round of market, most of the market share of NFT and Gamefi has been occupied by the Meme track, and most of the projects in the NFT and Gamefi tracks have lost their attention in the market, with a gradual decrease in users and almost no new funds. Therefore, ApeCoin, as a project that received dividends from the metaverse and Gamefi in the last round, is basically ignored in this round. At the same time, APE tokens will usher in the unlocking of 15.37 million APE on March 16, accounting for 1.54% of the total lock-up amount.
APT: This week's Aptos is mainly due to the fact that Bitwise submitted an application for a spot Aptos ETF on March 5th, giving it a certain expectation in the future, so its performance is relatively good, but Aptos is not among the few crypto reserves announced by Trump before, so if the details of building a crypto reserve are announced at the first White House crypto summit this Friday, then the announced token will receive market attention in a short time, Funds and attention will be diverted from other projects, so if this happens, it will not be friendly to Aptos, which is also a top-level public chain. And the APT token will usher in the unlocking of 11.3 million APT on March 12, accounting for 1% of the total lock-up amount, and the unlocked tokens are all in the hands of institutions, so it may continue to ship to form selling pressure, and at the same time, it may superimpose the transfer of attention and funds, which may exacerbate the panic of market investors about APT.
MERL: Merlin's TVL has dropped sharply this week, with a decline of 12.44%, and from the perspective of its TVL composition, the largest decline this time is mainly due to its on-chain DEX, Restaking and cross-chain projects, of which MerlinSwap has decreased by 34.33% and Pell Network has decreased by 87.11%. Among them, the TVL of the cross-chain project Meson itself is small, so it is ignored. Because Merlin is a BTC-L2, based on the fact that there are not too many ecosystems on BTC-L2, mainly DEX, Lending and Restaking projects, it can be seen that Merlin's TVL decline is due to a large-scale decline in its main ecological projects, and funds are constantly withdrawing from Merlin. At the same time, combined with the recent development of the BTC ecological project, it has not gained attention in the market, and due to the recent sharp decline in BTC, many pledged BTC have withdrawn from the protocol. But the decline in MERL this week was not large, only -1.8%. In view of the continuous outflow of ecological funds on the chain, it can be judged that there is a high probability that it will make up for the decline next week.
TON: This week, the TVL on the Toncoin chain has dropped sharply, with a decline of 10.68%, from the perspective of its on-chain TVL composition, the TVL of basically all ecological projects on its chain has declined, and from its TVL historical line, Toncoin's TVL has been in a downward trend since last year, that is, after the popularity of Telegram-based on-chain mini games, it has been in a state of withdrawal of funds, and combined with recent months The SocialFi project has always been on the edge of the entire Crypto industry, and has not created a popular star project, and as the popularity of on-chain mini games subsides, the user's money-making effect is getting worse and worse, and even the APY of ordinary Defi projects is not as good as that of ordinary Defi projects, so funds have been continuously withdrawing from Toncoin. Coupled with the recent downturn in sentiment in the crypto industry and the large decline in the price of TONCOIN, investors are generally not optimistic about Toncoin's on-chain ecological projects. Therefore, it can be judged that TON is likely to be in a falling market.
Market Sentiment Index Analysis
! Crypto Market Sentiment is Sluggish: Stablecoin Growth Shows Repatriation of Funds|Frontier Lab Crypto Market Weekly Report
The market sentiment index rose to 8% from 11% last week, and the overall market entered an extremely panic zone.
Hot tracks
Aave
*status quo
Aave, one of the leading Defi projects this week, performed very well, Aave ranked second in the top 20 Defi projects in TVL, second only to Infrared Finance on Berachain, with a growth rate of 5.86%, for a Defi project with a TVL of $19.227 billion, the growth rate of more than 5%+ is very huge, and the price of AAVE also rose, with an increase of 21.38%, Outstanding performance among the top 50 tokens by market capitalization.
There are two reasons why Aave is hot this week: first, Aave plans to optimize its ecosystem governance and token economy model through a series of proposals, including launching a "buy and distribute" plan, using the protocol's excess revenue to repurchase AAVE tokens at a weekly scale of $1 million and inject ecosystem reserves to reduce circulation supply and increase token value; Set up the Umbrella mechanism and the Aave Financial Commission (AFC) to distribute part of the excess income to aToken stakers and optimize fund management; Launch of the Anti-GHO token to enhance rewards for StkAAVE and StkBPT stakers; Terminated the LEND migration contract and recovered $65 million in AAVE injection reserves; and the adoption of a hybrid model to optimize secondary liquidity management to achieve greater liquidity at a lower cost. Second, the White House supports the repeal of the IRS rules on DeFi transaction reporting, reducing the compliance burden on DeFi projects and preserving the decentralized nature of DeFi projects, while attracting capital and talent back to spur a wave of innovation.
Aave is one of the iconic projects in the Defi industry, and its every move may affect the direction of the Defi industry in the future. Recently, the lack of innovation in the Crypto market, the development of the AI industry is moving closer to the direction of Meme, and the Meme wave has retreated, which has led to the entire Crypto industry has been in a downturn, so investors in the market at this stage have begun to stop believing in the stories and development of various industries, but focus on the real benefits brought by the project to users, after all, the real income is the most important thing for users. Therefore, there are projects with high APY in the market, such as Berachain and Sonic, which provide users with high APY to attract user participation. However, Aave has taken a fancy to the growth of DeFi dividends, and because Aave has been in a monopoly position in the lending track in recent years, it has accumulated sufficient capital reserves, Aave DAO's cash reserves have reached $115 million, and the supply of GHO stablecoins has exceeded $200 million. As a result, Aave's buyback proposal demonstrates multiple advantages, including strong cash reserves, diversified income structure, and high-quality asset rewards. It has made investors in the market believe that Aave can have a very good development in the future, and at the same time, it has opened a new growth point for various investors and project parties in the market. It is foreseeable that as investors pay more attention to the value capture ability of DeFi protocols, many DeFi projects will begin to shift to a dividend or buyback model to improve the ability to return the value of tokens.
At the same time, we can calculate from Aave's weekly repurchase amount of $1 million, which is about $52 million of AAVE per year, and AAVE's current market capitalization is $3.165 billion, which can be concluded that Aave's price-to-earnings ratio is 60.86 times. Among the buybacks, Maker is one of the most well-known and best-doing projects in the industry, trading at a price-to-earnings ratio of 20.75, according to Maker's website.
So from the comparison of Aave and Maker, it can be concluded that Aave's P/E ratio is much higher than that of Maker. Therefore, it can be concluded that although Aave has been given relatively high expectations by the market at this stage, the cost performance of buying AAVE is much lower than that of MKR.
Berachain
*status quo
This week, the whole market is in a volatile downward trend, and most of the top 10 TVL projects are in a state of decline, among which Berachain has the largest increase, reaching 17.21%, but compared to other public chains, the net growth that can continue for several weeks in today's more pessimistic crypto industry environment is very indicative of its strong trend, with TVL reaching $3.449 billion, ranking sixth among all public chain TVL. However, the price of its token, BERA, has seen a correction this week, falling by 12.94%.
This week, the growth rate of the TVL of the top DEX, Lending, and LSD projects in the Berachain ecosystem has slowed down this week, mainly due to the growth of the LSD project Infrared Finance and the DEX project BEX, which can reach 31.15% and 25.22% respectively, mainly because Infrared Finance has stabilized the APY of WBERA at around 120%, and BEX has stabilized the APY of the stablecoin pool Stable at around 16%, investors are still in a panic mood in the current market, and the stable income of high interest rates is still very attractive to investors. At the same time, the interest rate of the lending program Dolomite to the borrower is as high as 48.08%, which increases the demand for BERA from users.
We can conclude from the reasons for the popularity of Berachain, the main reason is that the Defi project on the Berachain chain improves the APY method to attract users, so that users on the chain can obtain higher returns in the current unstable market, so as to achieve the purpose of drainage on the Berachain chain. It can be seen that the key to the efficient growth of a blockchain ecosystem lies in driving the positive cycle of the economic flywheel. Berachain's core strategy is to focus on the DeFi track, through the two-wheel drive of staking and liquidity release, to empower on-chain assets, so that they can generate compound interest income in scenarios such as DEX, lending, and asset management, so as to achieve the goal of "staking is productivity". Specifically, the on-chain ecosystem needs to form a sustainable growth cycle through the path of "pledge lock-up→ liquidity release→ DeFi empowerment→ token appreciation→ user return→ re-pledge, and → developer gathering". However, once the new user's funds are insufficient to cover the arbitrage selling pressure, the decline in the price of the BERA token will lead to a decrease in yield, which in turn will trigger arbitrageurs to leave the market, causing a negative impact on the ecosystem. However, this week, Berachain is also facing a downward trend in the Crypto industry, first stabilizing the APY given to users, ensuring that the user's yield is greater than the decline of its tokens, so that arbitrage users have always made profits, and at the same time, the founder of Berachain said that in order to reduce the supply, "has been buying back the supply of that part of the seed round and the subsequent A round and other rounds". Therefore, from the perspective of the development of Berachain, it is important to continue to pay attention to the APY performance of DeFi projects on the Berachain chain, and the level of APY directly reflects the vitality and development potential of the ecosystem. Berachain, as a project with real income, has its project life and barometer of its APY and TVL changes.
We can see from Infrared Finance, the largest staking project on the Berachain chain, that the TVL of Infrared Finance is $1.844 billion, of which the TVL of the BERA token is only $182 million, and the circulating market value of BERA is now about $721 million, accounting for about 25.24% of the circulating ratio On-chain staking projects have staked about 30% of the circulating market value of BERA tokens. The staking ratio of about 30% can be said to be relatively low in non-POS chains. And the amount of BERA staking on the Berachain chain is rising at an angle of 45°, so we can foresee that the Berachain chain will still have more BERA into the staking in the future, thereby reducing the amount of BERA in circulation, so we are very optimistic about the future of Berachain.
Overall overview of the market theme
! Crypto Market Sentiment is Sluggish: Stablecoin Growth Shows Repatriation of Funds|Frontier Lab Crypto Market Weekly Report
Source: SoSoValue
In terms of weekly returns, the Sociafi track performed the best, while the Sociafi track performed the worst.
Preview of next week's Crypto events
Summary
Overall, the crypto market has shown a mixed pattern of volatility and panic this week, and despite the solid fundamentals of stablecoin funds and some hot tracks, the market as a whole is still affected by macro policy uncertainty and lack of investor confidence. Looking ahead, projects such as BTC, AAVE, and Berachain are expected to be market highlights due to their fundamental strengths and innovative strategies, while investors need to continue to pay attention to on-chain data, macro policy trends, and the further impact of upcoming unlocking events on market sentiment to grasp potential opportunities and avoid risks.