Market Overview
Market Summary
This week, the cryptocurrency market showed a clear downward trend, with both BTC and ETH experiencing significant declines. The market sentiment index remained stable, edging up slightly from 33 to 34, but overall sentiment is still in the âfearâ zone.
Stablecoin Market Dynamics
The total market capitalization of stablecoins continued to show a downward trend this week, with both USDT and USDC experiencing simultaneous declines:
- USDT: Market capitalization reached $183.1 billion, down 0.11% week-on-week. This ended several months of continuous inflows, indicating that as crypto prices fell sharply this week, capital â especially from non-U.S. investors â moved to risk-off positions.
- USDC: Market capitalization dropped to $75.1 billion, down 1.18% week-on-week, extending last weekâs decline with an even larger decrease of nearly $1 billion. This suggests continued risk-off sentiment among U.S. investors this week.
Market Drivers Analysis
- Institutional inflows weakened significantly: Spot ETF and treasury company purchases of BTC and ETH continued to decline this week. Outflows from BTC and ETH spot ETFs reached the highest level in months, with even traditionally stable BlackRock users recording large-scale redemptions â reflecting a sharp deterioration in market sentiment and weakened institutional support.
- Liquidity crisis worsening: After the U.S. government shutdown, the Treasury General Account (TGA) balance rose from $300 billion to $1 trillion, effectively draining $700 billion in liquidity from the market â equivalent to a hidden rate hike.
- Rising funding costs: The U.S. overnight repo rate surged to 4.2%, surpassing the Fedâs benchmark rate. This indicates severe liquidity shortages and tight funding conditions, significantly undermining market confidence.
- Stronger-than-expected employment data: The U.S. October ADP employment data exceeded expectations, showing that the labor market is not as weak as anticipated. However, given the limited macro data available, this does not provide meaningful support for expectations of a Fed rate cut in December.
Policy Outlook and Regulatory Developments
- Record-breaking government shutdown: The U.S. government remains shut down, setting a new record for the longest closure in history. The political standoff between Democrats and Republicans continues, with no agreement reached as previously expected.
- Political stalemate to extend into next week: As the two parties have failed to reach a deal, the shutdown is expected to last at least until the week after next, further drying up liquidity and weighing on markets.
- Macroeconomic data delayed: The shutdown has postponed the release of multiple key macroeconomic indicators, adding to uncertainty and blurring policy expectations.
Key Events to Watch Next Week
- Progress on bipartisan negotiations: The most critical factor is whether Democrats and Republicans can reach an agreement soon to reopen the government, which would directly impact liquidity conditions.
- Potential TGA liquidity release: Once the government resumes operations, large amounts of macro data will be released, and more importantly, the TGAâs $1 trillion liquidity could begin flowing back into the market, easing current tightness.
- Institutional buying recovery remains uncertain: Treasury firms and spot ETFs for BTC and ETH have seen their purchasing power drop to recent lows. Monitoring whether this weakness continues next week will be key to determining market direction.
- Data-driven volatility risk: As institutional and ETF buying activity tends to follow market movements, any negative macro data could trigger short-term risk aversion and reduced purchases, leading to rapid price drops.
Market Outlook
- Maintain a defensive stance: Given the uncertainty surrounding government negotiations and weak institutional inflows, investors should remain cautious and defensive.
- Monitor political progress closely: The key variable for liquidity recovery lies in the progress of bipartisan negotiations and the potential reopening of the U.S. government.
- Track liquidity release pace: Once the government resumes operations, closely monitor how quickly and extensively TGA funds are re-injected into the market.
- Guard against sharp declines: Under the dual pressure of political uncertainty and liquidity shortages, there remains a high risk of sharp price drops triggered by negative news. Investors should strictly manage position sizes to avoid unnecessary losses.
Next Weekâs Bearish Targets: LINEA, CYBER
LINEA: Systemic Risks from Ecosystem Contraction and 2.88 Billion Token Unlock
Project Fundamentals and Positioning Linea is an Ethereum Layer 2 scaling solution designed to provide higher throughput and lower transaction fees for the Ethereum ecosystem while maintaining compatibility and security with the mainnet.
Deteriorating Market Environment
- Sector-wide weakness: The Layer 2 sector has been underperforming over the past year. Critics argue that it has fragmented Ethereum rather than strengthened it. Overall market attention and capital inflows into the sector continue to decline.
- Lack of wealth-creation effect: Recent L2 ecosystem projects have failed to generate strong returns, resulting in declining investor confidence and continuous capital outflows.
Severely Deteriorating Fundamentals
- TVL plummeting: Lineaâs TVL has fallen from a peak of $1.683 billion to $673 million, a 60.01% drop, showing rapid user exit from its on-chain ecosystem.
- Stablecoin market cap collapsing: On-chain stablecoin capitalization fell from $337 million to $84.9 million in just over a month â a 74.81% decline â indicating accelerating capital flight.
- On-chain activity sharply reduced: Lineaâs daily fee revenue has dropped to around $11,000, showing a steep decline in active users.
- DEX trading volume in decline: On-chain DEX volume continues to drop, currently averaging $55 million per day.
- Ecosystem revenue slump: Aggregate daily revenue from Linea-based applications has fallen sharply to around $79,000.
- Cross-chain TVL collapsing: Cross-chain TVL has dropped from $4.323 billion at its peak to $85.5 million, a 98.02% decline â signaling a severe contraction in cross-chain capital flows.
- Net inflows collapsing: On-chain net inflows have dropped from a peak of $130 million to just $2.2 million â a 98.31% decrease.
Token Unlock Risk Assessment
- Unlock size and structure: On November 10, 2.88 billion LINEA tokens (4% of the total locked supply) will be unlocked. Given the current liquidity shortage, this event will place severe selling pressure on the market.
- Unlock recipients: This unlock mainly involves institutional investors and team members, both of whom have strong incentives to sell given the deteriorating project fundamentals.
- Insufficient market absorption capacity: LINEAâs average daily trading volume is around $14.5 million â far too low to absorb such a large influx of unlocked tokens, creating massive supply pressure.
Summary
Linea faces multiple overlapping systemic risks.
- At the sector level: The L2 ecosystem is under skepticism and capital outflow, lacking strong narratives or wealth creation.
- At the fundamental level: TVL has dropped 60%, stablecoin capitalization 75%, cross-chain TVL 98%, and net inflows 98%. All core indicators have deteriorated sharply.
- At the liquidity level: The upcoming 2.88 billion token unlock â amid limited $14.5 million daily liquidity â will generate immense selling pressure.
With these overlapping bearish factors, LINEA faces sustained downward pressure and severe survival challenges.
CYBER: Unlocking Pressure Amid Near-Zero Ecosystem Activity and $1,000 Daily Trading Volume
Project Fundamentals and Positioning
CyberConnect is an Ethereum Layer 2 project focused on SocialFi, aiming to provide a social layer for Web3 applications and serve as a gateway for the next wave of users entering Web3 experiences, tools, and financial liquidity. By building a decentralized social graph, it helps users unify and transfer their social relationships and data across different Web3 platforms and blockchains â addressing the monopoly and data silo problems of traditional Web2 social networks.
Weakening Industry Ecosystem and Market Position
- SocialFi sector stagnation: The SocialFi sector where CyberConnect operates has underperformed in recent years and failed to achieve its expected growth. Most users still rely on traditional Web2 social platforms, leaving the SocialFi segment marginalized and lacking mainstream capital inflows or user attention.
- Deteriorating perception of the L2 sector: As a Layer 2 project, CyberConnect is also affected by the credibility crisis facing the broader L2 sector. The market increasingly believes L2s have not revitalized Ethereum but rather fragmented its ecosystem. Moreover, the lack of wealth-creation narratives within L2 projects has caused sustained investor disinterest.
Severely Deteriorating Fundamentals
- On-chain trading activity nearly halted: CyberConnectâs on-chain DEX trading volume has remained near zero for a prolonged period, currently averaging only $2,000 per day, indicating virtually no user trading activity and exhibiting characteristics of a âdead chain.â
- TVL essentially zero: Cyberâs total value locked (TVL) has dropped to $27,839, effectively rendering the network inactive by Layer 2 standards.
- User growth stagnation: The project recorded only 23 new users per week, showing users are steadily exiting the ecosystem and that CyberConnect lacks the appeal to attract new participants.
- Collapsed content ecosystem: Only one new piece of content is published on-chain per week. This core social metric reflects the projectâs near-total lack of active users engaging in social interactions.
- Extremely low monthly active users: CyberConnectâs monthly active users are only about 80, an alarmingly low number for a social platform, showing that it has effectively lost its utility and value as a social network.
Token Unlock Risk Assessment
- Excessive unlock size: On November 15, a total of 4.23 million CYBER tokens (representing 4.23% of the total locked supply) will be unlocked â a relatively large proportion.
- Severely insufficient market absorption capacity: CYBERâs average daily trading volume is only about $700,000, which is far too low to absorb the upcoming supply. The unlock event will likely trigger substantial selling pressure and significant price impact.
- Strong sell-off motivation among unlock recipients: Based on the linear vesting plan, this unlock primarily involves institutional investors and the project team. Given the projectâs current downtrend, these holders have strong incentives to liquidate their positions and exit the market.
Summary
CyberConnect faces multiple systemic risks:
- At the market level: The SocialFi sector remains stagnant, with users continuing to prefer Web2 social platforms, while the Layer 2 segment suffers from a credibility crisis. CyberConnect has failed to establish differentiation in either category.
- At the business level: On-chain trading volume has fallen to just $2,000 per day, with only 23 new users per week, 80 monthly active users, and negligible content creation â signs that the platform has lost its fundamental utility as a social network.
- At the capital level: The upcoming November 15 unlock of 4.23 million CYBER tokens (4.23% of total locked supply) will introduce significant selling pressure in a market with only $700,000 in daily liquidity, especially since institutional and team holders have strong sell-off motivations.
These overlapping bearish factors exert sustained negative pressure on the CYBER tokenâs price. The project now shows clear âdead chainâ characteristics and faces a continued downward trajectory in the near term.
Token Unlock Schedule Next Week (Unlock Value > $1 Million)
Market Sentiment Index Analysis
The market sentiment index remained nearly unchanged, rising slightly from 33% to 34%. This week, BTC fell 8.64%, ETH dropped 15.94%, and TOTAL3 declined 7.93%, indicating that the altcoin market remains within the fear zone.
This Weekâs Key Event
$3 Billion Weekly Trading Volume Marks a Historic Milestone: Prediction Markets Are Redefining Financial Game Rules
Background
The year 2025 has witnessed explosive growth in the prediction market sector. Trading volume in October surged 91% month-over-month to reach $8.4 billion, and for the first time ever, weekly trading volume surpassed $3 billion. This surge has been driven by three powerful new entrants:
- Former U.S. President Donald Trump launched âTruth Predictâ via Truth Social, merging social media with financial betting.
- CZ, a key crypto figure, entered space through YZi Labs, investing in Opinion Labs and APRO Oracle to build decentralized oracle infrastructure.
- Wall Street giant ICE invested $2 billion in Polymarket, providing traditional financeâs âofficial endorsementâ of prediction markets and signaling that institutional players now view them as crucial tools for information discovery and risk management.
Following the 2024 U.S. election, where prediction markets proved faster and more accurate than traditional polling, the sector entered a period of full-scale capital and product expansion in 2025. Since June, nearly ten projects in this space have completed funding rounds with investors such as Coinbase, Paradigm, and Delphi, demonstrating strong capital conviction in the âprice-as-probabilityâ model.
The sector is evolving along multiple development paths:
- Regulatory compliance: Kalshi has obtained CFTC-approved licenses across all 50 U.S. states, while Polymarket achieved compliance by acquiring QCX, a U.S.-based regulated entity.
- Product innovation: From the social prediction models of Myriad and Flipr, to Limitlessâs high-performance CLOB system, and Driftâs integration of leveraged derivatives, the ecosystem has made qualitative leaps in compliance, innovation, and usability.
What Are Prediction Markets?
Prediction markets are decentralized financial systems built on blockchain, allowing users to trade outcomes of future events â ranging from political elections and sports games to economic indicators and entertainment awards.
The core mechanism is âprice equals probability.â Liquidity is provided by automated market makers (AMMs), and the trading price of a prediction token directly reflects the marketâs perceived probability of an eventâs outcome. All transactions are transparent and immutable, with outcomes verified and settled automatically via oracle systems.
Historically, prediction markets evolved from Augurâs early concept in 2015, which was limited by technology, to Polymarketâs breakthrough in 2024, where it outperformed traditional polling in the U.S. election, and finally to the 2025 new generation of platforms like Limitless, which have adopted trading-driven models, support high-frequency short-term predictions, and incorporate AI-generated markets.
The core value of prediction markets lies in aggregating dispersed individual knowledge into collective intelligence, offering a dynamic pricing tool for real-world information. Because participation is intuitive and engaging, it may become the first DeFi product to achieve mass adoption, allowing users to âtrade their beliefsâ for potential economic rewards.
Business Model Analysis of Prediction Markets
- Transaction Fee Model
The primary revenue source for prediction market platforms comes from transaction fees charged per trade, typically ranging between 0.2% and 2%, similar to commissions in traditional exchanges. Platforms such as Polymarket generate substantial revenue even at low fee rates due to massive trading volumes â especially during high-profile events like U.S. elections.
2. Market Creation and Management Fees
Platforms may charge fees for creating new markets or maintaining existing ones, akin to a fund management model. By setting quality thresholds for market creation, platforms ensure both a steady revenue stream and the professional integrity of markets while preventing low-quality âspamâ markets.
3. Liquidity Mining and Tokenomics
Many platforms issue native tokens, rewarding users who provide liquidity or engage in trading. Token holders often gain governance rights and a share of platform revenues. This system aligns incentives between users, investors, and the platform, driving early participation and value appreciation through token demand.
4. Data Services and API Monetization
The large volume of real transaction data generated in prediction markets holds significant commercial value. Platforms can sell data access and API services to financial institutions, research organizations, and media outlets. These datasets reflect public expectations about real-world events, providing actionable insights for decision-making and serving as a major revenue supplement.
5. B2B Enterprise Solutions
Prediction platforms can also offer customized internal prediction markets for corporate clients, helping forecast project success rates, market demand, or employee performance. Delivered through a SaaS subscription model, this approach provides high client retention and profitability, expanding the commercial boundaries of the prediction market ecosystem.
The Value and Significance of Prediction Markets
Information Aggregation and Price Discovery
Prediction markets efficiently aggregate dispersed information into collective judgments about future events. This âwisdom of the crowdâ often outperforms individual experts. Because participants risk real capital, market prices represent genuine beliefs rather than speculative opinions. Thus, prediction markets serve as credible indicators for policymakers, investors, and corporate strategists, offering forward-looking insights that traditional polls or forecasts cannot match.
Risk Management and Hedging Tools
Prediction markets introduce a new dimension of granular risk management, enabling precise hedging against specific future outcomes. Unlike broad insurance products, prediction contracts can target any verifiable event.
- For example, homeowners in Florida can hedge hurricane risk through storm-speed prediction contracts based on weather data.
- Businesses can hedge regulatory or policy risks by betting on legislative outcomes.
- Investors can adjust portfolios based on Fed rate decisions or employment data predictions.
This micro-level hedging improves both cost efficiency and precision, supplementing traditional risk management systems in modern finance.
Financial Innovation and Market Expansion
Prediction markets represent fundamental innovation in financial services â transforming information, expectations, and uncertainty into tradable financial products. This extends the boundary of tradable assets and creates new mechanisms for price discovery. For institutions, it introduces diversified revenue sources such as commissions, market-making, and data monetization. For investors, it offers uncorrelated asset classes that enhance portfolio diversification. Beyond finance, this trend supports the democratization of financial participation, reducing barriers for ordinary users and expanding access to sophisticated financial tools.
The Breakthrough Toward DeFi Mass Adoption
Prediction markets could become the first DeFi product to reach mainstream adoption, as they successfully mask blockchain complexity behind intuitive user experiences. Traditional DeFi faces barriers such as complex UX, wallet management, and security risks, but prediction markets bypass these by allowing users to simply bet on real-world outcomes without understanding underlying blockchain mechanics. Their viral nature, tied to real-world events, ensures constant user inflows. As users engage in prediction markets, they naturally transition to exploring other DeFi services â accelerating the broader growth of decentralized finance.
Political Influence and Narrative Shaping
From a political perspective, prediction markets are evolving into powerful tools for narrative control and voter influence, far surpassing traditional propaganda methods. When political actors place large bets to manufacture favorable probabilities, media outlets often amplify these figures, shaping public perception that âthe market expects a certain candidate to win.â
- This effect multiplies through several mechanisms.
- Media portray market odds as objective and neutral news.
- These âwin probabilityâ figures spread virally on social media.
- The public trusts market signals more than polls, interpreting them as credible forecasts.
The deep involvement of Trumpâs team with Kalshi and Polymarket, along with Truth Socialâs launch of Truth Predict, shows that political elites now recognize the strategic power of prediction markets. This new form of influence is covert, untraceable, and widespread, potentially redefining the rules of democratic competition and prompting a reevaluation of how democracy operates in the digital era.
Core Mechanisms of Prediction Market Platforms
Matching Models: The Engine of Market Activity
Prediction markets typically adopt either order book or automated market maker (AMM) models:
- The order book model, used by Polymarket and Kalshi, allows traders and market makers to post bids and asks. It enables efficient price discovery under high liquidity but suffers from widespread and execution difficulties when liquidity is thin.
- The AMM model uses algorithms to automatically adjust prices and execute trades without counterparties, maintaining continuous liquidity and supporting high-frequency, short-term markets. However, AMMs are sensitive to liquidity extremes, often leading to high slippage and security risks under stress conditions.
Contract Design and Question Definition: Ensuring Verifiability
Prediction contracts generally fall into three categories:
- Binary contracts (Yes/No outcomes) â common in elections or sports, paying a fixed amount (typically $1) upon resolution.
- Multiple-outcome contracts â suitable for multi-candidate or multi-team scenarios, allowing users to bet on specific results.
- Scalar contracts â used for continuous variables like prices or economic indicators, where payouts are proportional to the result value.
Proper contract design ensures clear, verifiable outcomes, minimizing ambiguity and dispute risks.
Liquidity Mechanisms: The Lifeblood of Market Operation
Adequate liquidity is essential for seamless market operation. It is maintained through:
- Professional market makers provide constant quotes,
- User incentives for liquidity provision,
- AMM-based liquidity automation, and Cross-subsidization between popular and niche markets.
However, liquidity is unevenly distributed â mainstream markets are deep, while niche ones remain barren. Low-liquidity environments expose small markets to price manipulation, undermining forecast accuracy and market credibility.
Oracle Systems: The Trust Bridge Between On-Chain and Off-Chain Worlds
Oracles are the critical infrastructure enabling automated settlement in prediction markets. They securely relay real-world event outcomes to blockchain systems. Traditional centralized oracles rely on manual verification, introducing subjectivity and latency.
Decentralized oracles â such as the UMA Protocol used by Polymarket â ensure data accuracy through economic incentives, supporting dispute resolution and arbitration mechanisms. A robust oracle system reduces manipulation risks, builds user trust, and serves as the foundation for long-term sustainability and credibility of prediction markets.
Major Projects in the Prediction Market
On-Chain Data Analysis in the Prediction Market
Trading Volume
As shown in the chart above, the trading volume of prediction markets has maintained a rapid upward trend since June 2025, and this momentum continues to strengthen. The weekly trading volume has already surpassed $3.1 billion, marking a new historical high.
Number of Users
As the chart above shows, the number of users in prediction markets has also been rising rapidly. Combined with the growth in trading volume, this indicates that the entire prediction market sector is experiencing robust, accelerated expansion.
Number of Transactions
Analyzing the number of transactions reveals that the current prediction market features a large number of small-value transactions. This reflects a highly active user base engaging in frequent trades with relatively small individual amounts. Hence, prediction markets can be characterized as high-frequency on-chain applications.
Open Interest
As shown in the chart, while trading volume and user activity have reached record highs, the number of open positions, although still at historically elevated levels, remains significantly below those recorded during the November 2024 U.S. presidential election. This suggests that major global events tend to trigger order-of-magnitude surges across all key on-chain metrics in prediction markets.
Trading Categories
An analysis of the trading categories from the two largest prediction market projects â Polymarket and Kalshi â shows that the top three segments by market share are sports, politics, and cryptocurrencies.
Summary
The explosive growth of prediction markets in 2025 marks the sectorâs transition from experimental products to mainstream financial instruments. With a 91% monthly trading volume growth rate and a weekly volume surpassing $3 billion, prediction markets have demonstrated the commercial viability and market demand for the âprice-as-probabilityâ model. From Trumpâs Truth Predict to CZâs decentralized oracle initiatives and Wall Street giant ICEâs $2 billion investment, the convergence of traditional political forces, crypto-native innovators, and institutional finance has injected massive capital and, more importantly, established prediction markets as strategic tools for information aggregation and risk management.
On-chain data â highlighting high-frequency trading behavior and the dominance of sports, politics, and crypto categories â further validates the unique value of prediction markets in bridging real-world events with on-chain finance.
Looking ahead, prediction markets are poised to become the first DeFi application to achieve large-scale mainstream adoption. Their intuitive user experience and tight coupling with real-world events provide a crucial pathway for broader Web3 adoption. As regulatory frameworks improve, technical infrastructure matures, and vertical applications expand, prediction markets will not only reshape mechanisms of information pricing and risk management but also profoundly influence political competition, media dynamics, and public decision-making.
In this new era of âtrading cognitionâ, prediction markets are evolving from mere financial tools into key platforms for collective intelligence and social consensus, with their developmental trajectory set to play a defining role in shaping the future landscape of decentralized finance.
Sector Performance
The PayFi sector performed the best this week, while the NFT sector performed the worst.
- PayFi Sector: Within the PayFi sector, XRP, BCH, XLM, and LTC account for a combined 99.18% of the sectorâs total market share. Their weekly declines were -7.81%, -11.22%, -11.76%, and -9.08%, respectively. Although individual project performances varied, the PayFi sector overall outperformed others, making it the best-performing category this week.
- NFT Sector: Within the NFT sector, PENGU, NFT, APE, and SUPER make up a combined 92.46% of the sectorâs total market share. Their weekly declines were -23.66%, -7.82%, -10.36%, and -18.69%, respectively. The generally larger losses across these tokens caused the NFT sector to become the worst-performing category this week.
Upcoming Major Crypto Events Next Week
- Thursday (November 13): U.S. October CPI (seasonally adjusted, year-over-year)
- Friday (November 14): U.S. October retail sales (month-over-month)
Summary
The cryptocurrency market experienced a broad-based decline this week: BTC fell 8.64%, ETH dropped 15.94%, and TOTAL3 declined 7.93%, indicating that Ethereum faced greater downward pressure. The market sentiment index plunged from 33 to 22, remaining deeply in the fear zone and deteriorating further.
The stablecoin market also reflected strong risk-off behavior and capital outflows. USDTâs market cap fell by 0.11% to $183.1 billion, ending several months of steady inflows, suggesting that non-U.S. Investors are retreating to safety. USDCâs market cap fell by 1.18% to $75.1 billion, extending last weekâs decline with nearly $1 billion in net outflows, indicating that U.S. Investors continue to withdraw from the market amid risk aversion.
The boom of the prediction market has emerged as the most significant breakthrough in recent weeks. Against the backdrop of a record-high $3 billion weekly trading volume, Trump launched Truth Predict through Truth Social, CZ expanded YZi Labsâ decentralized oracle infrastructure, and Wall Street giant ICE invested $2 billion in Polymarket. The joint participation of traditional political forces, crypto-native players, and institutional finance has injected massive capital and, more importantly, established prediction markets as strategic tools for information aggregation and risk management. The âprice-as-probabilityâ model has now been fully validated, and prediction markets are poised to become the first DeFi application to achieve large-scale mainstream adoption. Their intuitive user experience and close coupling with real-world events provide a key pathway for wider Web3 adoption.
Looking ahead, the U.S. government reopening and TGA liquidity release will serve as decisive variables for market sentiment next week. Under the triple pressures of weakening institutional inflows, worsening liquidity stress, and rising capital costs, the timing of the $700 billion in liquidity withdrawn from the U.S. Treasury General Account (TGA) being re-injected into the market will directly determine short-term price trends.
Investors should maintain a highly defensive posture amid this complex environment of political uncertainty and liquidity exhaustion. It is essential to pay attention not only to structural opportunities from innovative sectors such as prediction markets and the historic transformation of the new âtrade-on-perceptionâ era, but also to guard against potential systemic shocks that could arise from delays in bipartisan agreements or a further decline in institutional purchasing power. Adequate risk control and position management are necessary to prepare for policy-driven volatility that may occur in the near term.