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Monthly Market Insights

Crypto Market Performance

The crypto market witnessed robust growth in December, marked by a 15% increase in total market capitalization. This surge was largely fueled by the heightened anticipation of the first US spot Bitcoin ETF approval in January. The market maintained a strong uptrend throughout most of the month, with a single notable dip of nearly 8% on December 11. This decline followed the news of BTC inscriptions being listed in the US National Vulnerability Database on December 10. Subsequently, the market entered a consolidation phase, predominantly trending upward. The general consensus among market participants is cautiously optimistic regarding the SEC’s decision. This optimism persists despite several last-minute amendments submitted by ETF applicants. With a decision expected in the first two weeks of January, the outcome and the market’s reaction remains to be seen.

Among the top 10 coins, alternative Layer-1 coins, such as AVAX, SOL, and ADA, led the way with monthly gains of 84%, 71%, and 60%, respectively. The surge in interest for L1 coins was driven by Solana’s remarkable performance over recent months, thus shifting the market focus toward these so-called “Ethereum Killer” coins. Factors such as airdrop farming, meme coin frenzy, and bearish sentiment surrounding Ethereum also contributed to this trend. Additionally, the fundamental aspects of these L1 networks have seen improvements.

DOT and BNB also showcased strong performance, ending the month with gains of 53% and 39%, respectively. Notably, BNB broke through its previous stagnation, emerging as the fifth-best performer among the top 10 coins. This surge in BNB’s value can be attributed to Binance’s increased activity around Launchpool events, with three new Launchpools taking place in December. These Launchpool events allow users to receive new token rewards by staking BNB and other stablecoins, consequently contributing to the demand for BNB.

Both BTC and ETH ended the month with modest gains under 12%. Meanwhile, at the lower end of the spectrum, XRP and TRX lagged behind their peers with gains of around 2%.

Decentralized Finance

December witnessed an expansion in the DeFi sector, with TVL sustaining its uptrend from November, registering a 15.2% MoM increase. All top 10 chains ended the month in positive territory, although Solana witnessed the strongest growth at 115% MoM gains. Activity on Solana is accelerated by the launch of Jito Finance’s highly anticipated JTO airdrop and BONK memecoin trading, among others. Other notable gainers include Base and Avalanche, recording increases of 53.87% and 60.70%, respectively.

Non-Fungible Token

The overall NFT market in December notched positive gains. Total sales volume exceeded US$1.7B, recording the third consecutive month of growth for NFTs and a MoM increase of 77.17%. Growth was mainly driven by increased activity seen on the Bitcoin and Solana networks, which saw USD sales volume grow by 125.63% and 378.90%, respectively.

Stablecoin transfer volumes continued their upward trajectory, increasing from US1.2T in December. The increase is evident across nearly all major networks, mirroring the broader trends of capital influx observed in recent months. This rise also led to significant shifts in market dominance. Ethereum and Tron remain the frontrunners in stablecoin activity, accounting for a hefty total of US86.2B to US$297.3B, which reflects an MoM growth of 244.9%.

Initially emerging on Bitcoin due to its lack of smart contract capabilities, inscriptions refer to various forms of data, typically metadata of tokens or NFTs, written to blockchains. After gaining popularity on Bitcoin, we are now seeing inscriptions spread to a range of EVM-compatible chains, despite these networks already possessing native fungible and non-fungible token functionality. This shift triggered considerable transaction activity, likely motivated by market speculation, as traders sought to replicate the success of BRC-20 tokens on these chains. Notably, Polygon experienced the highest activity with 168.3M inscriptions to date, followed by Avalanche at 115.4M and BNB Chain at 95.5M.

The TVL of LSTs on EigenLayer surged in December from around US1.1B at the end of the month. This came after a decision by the protocol to raise its deposit caps for LSTs from under 120K ETH to 500K ETH on December 18. Additionally, the acceptance of six new LSTs, such as Binance’s WBETH, Swell’s swETH, Stakewise’s osETH, Stader’s ETHx, Origin’s OETH, and Ankr’s ankrETH, also increased the accessibility of the protocol. The surge in demand for staking on EigenLayer may also be contributed by restakers who are positioning to earn potential airdrops in the future, although this remains speculative.

Blast is an upcoming Ethereum Layer-2 that aims to provide native yield for depositors of ETH and stablecoins. Since the introduction of its early access phase in November 2023, Blast has seen its TVL grow to north of US600M bridged and more than 75K users who have deposited ETH on Manta New Paradigm.