Crypto Market Weekly Report: Decentralized Finance and AI Lead Market Recovery

This week, the crypto market has shown a significant warming trend, with the sentiment index rising from 11% to 35%. Although it is still in the panic zone, there has been a notable improvement. The market capitalization of stablecoins continues to grow, indicating that institutional funds are still entering the market. The market recovery is mainly driven by two factors: first, the U.S. CPI data met expectations; second, there is an optimistic expectation that Trump may relax encryption regulations if he wins. Overall, small-cap tokens have outperformed the market, especially DeFi and AI-related tokens, which have seen significant gains, indicating a trend of funds beginning to shift from Bitcoin to small-cap tokens.

Decentralized Finance ecosystem development

The total locked value in the DeFi sector slightly increased to 53.5 billion USD, with a month-on-month growth of approximately 1%. It is worth noting that DeFAI, as a product combining DeFi and AI, saw its market cap surge from 600 million USD to 3.2 billion USD within a week, demonstrating the strong market demand for innovative DeFi applications.

Development of the AI Track

The AI Agent sector has continued its strong development trend since the end of last year, shifting from simple AI token trading to deeper application scenario development. The rise of DeFAI signifies that the application of AI in the crypto market has entered the 2.0 stage, mainly reflected in four directions: user-friendly AI interfaces, portfolio management, infrastructure development, and market analysis forecasting. The development paths of leading projects such as Griffain, Anon, and AXIBT show that the market is transitioning from the proof-of-concept stage to the practical application stage.

Public Chain Performance Analysis

Layer 1 public chains are generally showing a stable upward trend, but the increase is not as significant as that of the DeFi and AI sectors. Among mainstream public chains, those with AI and DeFi ecosystem advantages are performing better, reflecting that the value of underlying public chains increasingly relies on the prosperity of their upper-layer application ecosystems. It is noteworthy that public chains supporting AI computing are beginning to attract market attention, indicating that a new round of public chain competition may revolve around AI computing capabilities.

Future Market Outlook

The short-term market will be influenced by the Federal Reserve's January interest rate meeting and Trump's inauguration, with increased volatility expected. Investors are advised to focus on projects with existing practical application scenarios when selecting DeFi projects, avoiding the pursuit of purely conceptual speculation. In terms of DeFi investments, opportunities for returns in yield farming projects can be considered, but leverage risks must be strictly controlled. Regarding timing, it is recommended to observe the policy changes brought by Trump's inauguration in the short term, avoiding blind chasing of highs to ensure the safety of the investment portfolio.