Market Overview Overall Market Situation

This week, the cryptocurrency market remained in a consolidation phase, with the market sentiment index rising from 22% to 33%. The market capitalization of stablecoins continued to grow (USDT reached $141.8B, USDC reached $56.2B, with changes of -0.07% and +0.17%, respectively), indicating that institutional funds are still entering the market, but the speed of inflow has significantly slowed compared to last week. The overall market sentiment remained weak, mainly due to FUD and negative sentiment caused by various scandals triggered by Argentina’s President Milei’s coin issuance, further impacting an already fragile market. As a result, altcoins underperformed against the benchmark index.

Next Week’s Predictions Bullish Targets: ETH, XRP, LTC, S, BERA

ETH: Recently, ETH has been under strong FUD due to various factors, and the surge of meme coins in the Solana ecosystem has attracted funds from Ethereum to Solana, leading to a decline in ETH’s price. However, as the meme coin hype on Solana fades, tokens of these projects have dropped significantly, and new meme projects are struggling to gain attention. This has led investors to shift funds back into the Ethereum network and sell SOL for ETH, participating in Ethereum-based DeFi projects. Furthermore, the upcoming Pectra upgrade and the expected approval of ETH staking are expected to provide some support for ETH’s price.

XRP: This week, Trump shared an article about XRP on his Truth Social platform, boosting its attention. Progress on XRP’s spot ETF applications has also advanced, with the SEC confirming that they have accepted the application. The ongoing lawsuit with the SEC might soon be resolved, and XRP’s betting approval on Polymarkt has reached 78%, contributing to the price rebound. Additionally, on-chain whales have purchased over 150 million XRP during this week’s dip, indicating continued institutional confidence. LTC: This week, the LTC ETF from Canary Fund was confirmed and registered with the U.S. Depository Trust & Clearing Corporation (DTCC), with the ticker symbol LTCC. The SEC has officially received the 19b-4 filing for the LTC ETF. Polymarkt has also approved a betting rate of 85% for LTC, signaling strong market optimism for LTC’s ETF approval.

S: Sonic, a Solana-based GameFi Layer 2 project, has recently expanded into DeFi, causing its TVL to surge. With high yields in liquidity staking projects like Beets and Origin (20.4% and 37.08% annualized returns), users are increasingly participating in Sonic’s ecosystem. As a result, the price of S has experienced a spiraling rise. In the short term, high returns will likely drive further price increases.

BERA: Despite the market being in a weak consolidation phase and affected by the meme coin pullback, Berachain’s TVL growth this week was impressive, rising by 75%. Major DEX, lending, and LSD projects on the Berachain network have seen TVL increases of over 50%. This follows last week’s 217% surge, indicating sustained growth momentum. BERA’s price also rebounded significantly this week, and its on-chain ecosystem and community development suggest further upside potential in the short term.

Bearish Targets: SOL, ALT, PORTAL

SOL: The collapse of Argentina’s President Milei’s LIBRA token and the resulting scandals, alongside insider trading allegations around presidential tokens and Jupiter, caused market investors to lose confidence in meme coins. As Solana has been one of the top platforms for meme coin projects, the outflow of funds from Solana has caused a significant drop in active addresses, down 54.6% from 18.5 million to 8.4 million. Additionally, Solana’s on-chain transaction volume has decreased by 91.26%, from $35.5 billion to $3.1 billion. The upcoming unlocking of 11.2 million SOL on March 1st is likely to heighten investor fears.

ALT: Altlayer, a representative project in the Raas space, aims to simplify Ethereum’s Layer 2 development for projects. However, Layer 2 projects have underperformed recently, leading to negative sentiment in the market, with many blaming excessive Layer 2 solutions for Ethereum’s recent price weakness. Altlayer’s performance has also suffered, and with the upcoming unlock of 195 million ALT (representing 1.95% of the current circulating supply), a short-term price drop is expected.

PORTAL: Portal, a cross-chain gaming platform, has struggled as the GameFi sector underperforms. The decline in interest in the Play-to-Earn model has led to a reduction in users and investments in GameFi. As a result, Portal’s performance has been weak, and the upcoming unlock of 256 million PORTAL (representing 5.79% of the current circulating supply) could trigger further price declines.

Market Sentiment Index Analysis

The market sentiment index has risen from 22% last week to 23%, still remaining in the panic zone.

Hot Sectors

Ethereum Ecosystem Current Status

Recently, as the meme coin craze fades, the market has returned to a more rational state, with many on-chain funds flowing back to the Ethereum chain. Ethereum’s TVL increased by 4.68% this week, and daily active users, transaction volume, and stablecoin quantity on the Ethereum chain have all risen. As a result, ETH and various tokens in the Ethereum ecosystem have seen price increases, maintaining strength amidst the market’s consolidation phase compared to other projects.

Reason for Popularity

The collapse of Argentina’s President Milei’s LIBRA token and the resulting insider trading scandals sparked FUD in the meme token market. After losses from meme token investments, many on-chain investors have shifted funds back to Ethereum, entering various DeFi projects for stable on-chain returns instead of seeking risky profits. Additionally, Ethereum’s upcoming Pectra upgrade, which will reduce gas fees and improve contract execution speed, has positively impacted the Ethereum ecosystem. As investors abandon meme tokens and seek “value returns,” Ethereum has become the top choice for these funds.

Future Outlook

The recent rise in the Ethereum ecosystem is similar to previous FUD-driven situations, with meme projects being the key factor. Although the pullback of meme projects has led investors back to Ethereum for DeFi participation, the main reason is still the weak market sentiment, reduced liquidity, and the fading wealth effect from meme projects. If Ethereum’s ecosystem doesn’t continue to innovate, new meme waves could emerge as market liquidity recovers, drawing funds away from Ethereum. Therefore, Ethereum’s long-term success will depend on its ability to innovate within the DeFi space. Without continuous innovation, the current surge may be short-lived.

Sonic Current Status

Sonic’s TVL has been growing rapidly, with a 46.41% increase this week, reaching $578 million. Sonic’s token S also rose by 41.82%, ranking high in price increases.

Reason for Popularity

Sonic has recently shifted focus from GameFi to DeFi, heavily promoting DEX, lending, and LSD projects within its ecosystem. The liquidity staking projects Beets and Origin now offer annualized returns of 20.4% and 37.08%, respectively. For users, liquidity staking poses no liquidation risk and offers attractive returns, prompting more users to buy or borrow tokens to participate, driving up the price of S.

Future Outlook

Sonic’s recent popularity can be attributed to the high annualized returns offered by LSD projects, attracting more users for arbitrage. This has led to rapid growth in TVL, user numbers, and transaction volumes in the short term. However, this model might not be sustainable. As more users participate in staking, S token’s increasing supply could lead to selling pressure. When new users cannot cover the selling pressure, the price of S could fall, leading to lower yields and a decrease in user participation. Therefore, Sonic’s future success will depend on whether it can continue to create high-return or practical projects that retain users and funds.

Berachain Current Status

Berachain’s ecosystem has performed well since its mainnet launch. TVL grew by 27.51% this week, reaching $3.116 billion, ranking seventh among all blockchains, just behind Base at $3.343 billion. Berachain’s TVL has even surpassed that of Arbitrum, which has been running for two years. The price of BERA token also rose by 28.8%, reaching $7.61, surpassing its launch price.

Reason for Popularity

Berachain’s major DEX, lending, and LSD projects all saw significant TVL growth this week. The DEX BEX saw an 87.44% increase, lending platform Dolomite rose 52.76%, and LSD projects Infrared Finance and Kodiak grew by 43.76% and 16.32%, respectively. This contributed to Berachain’s overall TVL increase. Additionally, the RFB program, which distributes tokens to developers and community members, has positively impacted the ecosystem.

Future Outlook

Berachain’s success this week is largely due to its LSD project Infrared Finance, which offers high APYs across five pools, attracting a significant influx of funds. However, like Sonic, Berachain faces the risk of increasing selling pressure as more users participate in staking. Once new funds can no longer cover the selling pressure, the price of BERA will drop, and yields will decrease, leading to the departure of arbitrageurs. Therefore, Berachain’s future success will depend on the emergence of new, high-quality projects and whether it can maintain competitive rates for its LSD projects.

Market Sector Overview

Based on weekly return rates, the RWA sector performed the best, while the NFT sector performed the worst.

RWA Sector

In the RWA sector, OM, ONDO, and MKR make up a significant portion, accounting for 92.65%. Their weekly price changes were 29.43%, -7.42%, and -23.63%, respectively, making the entire Cefi sector’s index the best performer this week. This was largely due to the U.S. government’s support for the crypto industry and the SEC’s shift in stance, leading the market to believe that the RWA sector will experience significant growth this year.

NFT Sector

In the NFT sector, APE, PENGU, NFT, and BLUR dominate, accounting for 86.85%. Their weekly price declines were -8.63%, -14.28%, -1.22%, and -0.46%, making the NFT sector the worst performer this week.

Upcoming Major Crypto Events

• Monday (Feb 24): AI Agent & Web3 Courses; Ethereum Testnet Holesky activates Pectra upgrade.
• Tuesday (Feb 25): FTX’s first repayment; US-ASIA Web3 Community Day at ETHDenver: APAC DAO x LUKSO.
• Thursday (Feb 27): ELEVAXION Founder Brunch.
• Friday (Feb 28): U.S. January Core PCE Price Index Year-Over-Year.

Summary

This week, the cryptocurrency market remained in a state of consolidation, with the market sentiment index recovering slightly from 22% to 33%, though still showing signs of weakness. This was primarily driven by the FUD (Fear, Uncertainty, and Doubt) caused by the scandals surrounding Argentina’s President Milei’s token launch, which negatively impacted the industry. The stablecoin market cap continues to grow, suggesting institutional funds are still entering, though at a slower pace.

The Ethereum ecosystem saw capital inflows as the meme coin hype faded, with TVL and user activity increasing. Additionally, expectations around the Pectra upgrade are providing support for ETH prices. The RWA sector performed notably well, benefiting from favorable U.S. policies, while the NFT and meme coin sectors showed weak performance.

Looking ahead to next week, key events like the FTX repayment, Ethereum’s testnet upgrade, and the U.S. Core PCE data are expected to have significant impacts on the market. Investors should remain vigilant and keep an eye on market developments.