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Market Overview 📉
This week saw Bitcoin (BTC) attempt another breakout over the $100K leading into the new week before hotter than expected macroeconomic data sent the markets plummeting. The total crypto market cap fell over the week, with a drop of just over 5.25% to $3.372T this week from $3.559T the week before.
Bitcoin (BTC) fell 4.10% across the week, while Ethereum (ETH) fared slightly worse, falling 6.46% from the previous week.
Daily liquidations this week surged especially on the long side, with a combined $1B in longs liquidated over the last three days of the week. Short liquidations remain largely muted, with an average of around $100M liquidated per day on small bounces across the board. Funding rates in general have fallen even further, with funding rates on certain majors soon approaching negative territory as market participants flip bearish.
📌 The US Department of Justice authorizes the sale of $6.5B worth in Bitcoin seized by the FBI in the investigation of the now-defunct dark web marketplace, Silk Road. - Link
📌 Coinbase announces that it has received a subpoena from the CFTC regarding their inquiry into Polymarket. - Link
📌 Michael Saylor’s MicroStrategy, acquires another 1,070 BTC for $101M at an average price of $94,004 across the past week. - Link
Why does it matter?
This week marks the first real week of trading, following the two prior weeks of holidays from Christmas to the New Year. While the market initially showed some strength, perhaps reflecting the collective optimism of market participants, the strength did not last and the move quickly retraced. Coupled with hot economic data and the Department of Justice’s announcement surrounding the Silk Road Bitcoin, bears are back in control of the market again. Bitcoin fell back into range lows, sitting in the low 90Ks, while altcoins fared much worse in general. Traditional equities also suffered from the news, with the S&P 500 falling 1.72% from its weekly high to end the week flat, while the Nasdaq fell almost 2.5% from its weekly high.
Despite altcoin weakness, Bitcoin dominance has not yet broken its downtrend yet, climbing only 0.77% this week to 58.09%, after reversing a drop from early on in the week. Notable outperformers among altcoins were still largely centered around AI-related tokens, including Swarms (SWARMS), Freysa AI (FAI), and AIOZ Network (AIOZ). Other outperformers include Sui (SUI) and DeepBook (BOOK), the liquidity layer for Sui.
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Narrative of the Week 📰
Macro is back on the menu as hot economic data reports steer the markets and risk-on assets to the downside.
📌 JOLTs Job figures and ISM Services Prices come in way over estimates, pushing expectations for rate cuts to past July 2025 as yields continue climbing upwards. - Link
📌 An alternative viewpoint considering the possibility of a non-inflationary Trump term, the end of quantitative tightening, and a potentially bullish 2025. - Link
Why does it matter?
Many crypto investors enter the first quarter of 2025 with the expectation of a bullish Q1, especially against the backdrop of a pro-crypto Trump entering office on the 20th this month. However, macroeconomic data is back once again to torment the markets as new data dashes all hopes of early rate cuts in the year. Yields also continue to creep up, continuing to spell doom for risk-on assets as investors flee to safety.
Major Project Updates 🗓️
📌 Hybrid exchange, Backpack Exchange, acquires FTX EU, the European arm of the now bankrupt FTX exchange, as well as its MiFID II License. - Link
📌 Zero-knowledge rollup, StarkNet, releases SN Stack, a battle-tested ZK tech stack design to enable projects to build out their own custom environment to meet their business needs. - Link
📌 Berachain announces the projects selected for Request for Application (RFA) allocations, which includes projects such as Abracadabra Money, Beradrome, Curvance, Jumper Exchange, and more. - Link
📌 Fintech application, Revolut, becomes the first banking data publisher to partner with oracle network, Pyth Network. - Link
📌 L1 chain, Injective, passes the governance proposal for INJ 3.0, which seeks to revamp the project’s tokenomics by reducing token supply until Q1 2026 through token burns and staking incentives. - Link
📌 Solana restaking layer, Solayer, announces InfiniSVM, a hardware accelerated SVM blockchain as part of their 2025 roadmap to ‘infinitely scale’ Solana while utilizing sSOL and sUSD as yield-bearing assets on the chain. - Link
📌 Polkadot parachain, Phala Network, pivots to becoming an Ethereum L2, powered by Conduit and Succinct Labs. - Link
Why does it matter?
The Backpack Exchange was launched by ex-employees of the FTX exchange, which was run into bankruptcy by its founder, Sam Bankman-Fried, in 2022. The acquisition of the EU arm of FTX marks a huge step forward for Backpack, as it acquires its MiFID II License as well, which regulates a wide range of financial products, including derivatives. With the acquisition, the team looks to complete their suite of products, bringing perps trading back for users in the EU.
DeFi Brief 🏦
📌 Leading money market protocol, Aave, deploys on the Aptos testnet, marking their first ever deployment on a non-EVM chain. - Link
📌 Season 1 of ZKSync Era’s ZKSync Ignite program goes live, which seeks to distribute 100M ZK tokens from 6 January to 31 March to users who provide liquidity across protocols on ZKSync, including Uniswap, SyncSwap, Aave, and more. - Link
📌 Stablecoin protocol, Usual Money, will turn on their fee switch when >50% of USUAL are staked (and auto-activates on 1 February if not), which distributes 100% of protocol revenues to stakers in USD0. - Link
📌 Frax Finance introduces the Frax Universal Interface, a one-stop shop for all things Frax: swaps, bridging, earn and more, all through a single interface. - Link
📌 Liquidity layer, Elixir, partners up with Securitize to enable DeFi access fo the holders in the Hamilton Lane SCOPE fund via their stablecoin, deUSD. - Link
Why does it matter?
Aave has been one of the projects to have tremendously outperformed, with its impressive revenues, growing total value locked (TVL) and the tailwinds of a pro-DeFi presidency led by Donald Trump in 2025. However, that said, Ethereum as an ecosystem has shown tremendous weakness against rising alt-L1 chains and even competition from its own L2s. Aave’s move towards non-EVM deployments could be a step towards diversifying away from its reliance on Ethereum’s success for Aave’s future and could also represent a rising trend among Ethereum-based DeFi projects.
Meme Coins 🚀
📌 A community-launched memecoin, Large Language Model (LLM), using an fattened image of ai16z’s Eliza mascot goes viral. ai16z developer, Shaw, criticizes the token before promoting a copy of it named Fatcoin. - Link
Fundraises 💰
📌 Bitcoin infrastructure team and the developers behind the Aqua Bitcoin wallet, JAN3, raises $5M in a seed round, with participation from Fulgur Ventures, Tethere, Lightning Ventures and East Ventures, among others. - Link
📌 Crypto research and analytics platform, SoSoValue, raises $15M in a Series A funding round led by HongShan Capital Group (HSG) and SmallSpark, with support from Mirana Ventures and Safepal. - Link
📌 The first gaming-focused L2 on ZKsync, ZKcandy, raises $4M in a funding round led by Wemix Network, Animoca Ventures, Spartan Group, Prelone Capital, Presto Labs and more. - Link
📌 Verifiable AI startup, Rena Labs, raises $3.3M in a pre-seed funding round, led by Paper Ventures, with other investors including Lightspeed Faction, Eterna Capital, Lyrik Ventures and more. - Link
Airdrops Abound 🎁
📌 Money market platform, Dolomite, announces its upcoming DOLO token and airdrop, which will distribute 20% of the token supply to their community. The token will only be launched on Berachain after its mainnet launch. - Link
📌 Nansen CEO, Alex Svanevik, breaks down how to earn Nansen points: subscribing, staking with their validators or referring other users to Nansen, with an expected 500M to 1B points to be distributed. - Link
📌 Solana DEX aggregator, Jupiter Exchange, announces that their airdrop checker will be released “before Wednesday” next week. - Link
📌 Blockchain data project, Bubblemaps, announces their upcoming airdrop for active users of Bubblemaps V2. Users can still join the waitlist and earn points for a share of the airdrop. - Link
📌 Sonic SVM airdrop goes live, distributing 7% of their total token supply to Sonic AVS delegators, SonicX users, Odyssey participants, and more. - Link
Tweet of the Week 📝
Source: 0xENAS
The beginning of the end, or a potential generational entry, who knows?
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