From a historical perspective, February is usually a strong month for Bitcoin in a halving year.
2017 and 2021 cycles: Bitcoin recovered an upward trend in February after declining in January. 2025 forecast: If history repeats itself, we may see a similar upward movement this year. In the coming months, speculation is brewing about administrative orders related to Bitcoin. Although unconfirmed, such events have historically had a significant impact on the market.
Industry Overview
1. Infrastructure and Interoperability
Reducing network tribalism through cross-chain connections.
We are seeing an acceleration of cross-chain development—projects like Superposition (Arbitrum L3) and Abstract (integrating Stargate into Hydra) are launching solutions to improve the efficiency of asset transfer and data sharing. LayerZero is expanding its reach, enabling applications on Superposition to access liquidity from over 100 connected chains. Meanwhile, Arcana Network is collaborating with Scroll to allow users to pay gas fees in stablecoins (USDC/USDT) on any chain, significantly simplifying the onboarding process for users.
My view: This highlights the continued push for frictionless interoperability. The ability to seamlessly transfer assets and data across chains (L1 → L2 → L3) is rapidly becoming a basic requirement. Projects that can integrate user-friendly interfaces, fuel fee abstraction, and universal bridging are poised to reduce the "network tribalism" that has historically hindered DeFi adoption. More standardization and potentially more specialized L3s are expected to emerge, tailored for unique vertical industries (e.g., gaming, RWA, institutional DeFi).
2. Liquidity, Lending, and Real-World Assets
The holy grail of credit and lending ecosystems.
What happened:
- Coinbase launched BTC-backed loans for US users, providing a more mainstream audience the ability to leverage their Bitcoin.
- Tradable integrated with ZKsync, bringing $1.7 billion in tokenized private credit (RWA) to the network, showcasing how institutional-grade products are further penetrating DeFi.
Plume Network raised over $4.5 billion in assets for tokenization, with $60 million in TVL before the network even launched, and launched a $25 million RWAfi ecosystem fund.
My view: The blurring of the lines between CeFi and DeFi is a hallmark of the industry's maturation. Coinbase's foray into crypto lending shows that centralized exchanges are willing to offer products typically associated with DeFi platforms—this may cannibalize DeFi's direct user base, but also validates the efficacy of on-chain lending as a critical financial tool. Furthermore, the integration of RWA remains the "holy grail," connecting traditional finance with on-chain liquidity. If this trend continues, DeFi may see stronger yields, deeper liquidity, and higher institutional trust, though regulatory oversight may also increase.
3. Liquid Staking and Synthetic Bitcoin
Innovations in staking mechanisms.
What happened:
- Babylon Labs launched YBTC, a 1:1 Bitcoin-backed liquid staking token, which has integrated with pSTAKE.
- BrahmaFi launched the Onchain+ program, bundling multi-chain strategies and an AI agent (ConsoleKit) for automated DeFi operations.
My view: Liquid staking has proven to be a way to unlock additional rewards for stakers without sacrificing liquidity. By tokenizing staked assets (like BTC, ETH, etc.), DeFi participants can use them as collateral or freely trade them. This "dual yield" approach—earning staking rewards and potentially DeFi yields—is likely to continue accelerating. However, there are inherent risks: the more an asset is "liquid staked," the deeper the complexity of the system. Protocols must maintain transparency and undergo thorough audits to prevent hidden leverage from destabilizing the system.
4. Ecosystem Expansion and Strategic Partnerships
Significant user onboarding efforts and corporate collaborations.
What happened:
- Polygon Labs partnered with India's largest telecom company Reliance Jio (450 million users) to integrate blockchain solutions into the Jio app.
- Ledger integrated Uniswap into Ledger Live Desktop, enhancing the user experience for hardware wallet enthusiasts.
Abstract is preparing its mainnet, hinting at a wave of new multi-chain products on the horizon.
5. Airdrops, Incentives, and Liquidity Mining
Competing for user adoption.
What happened:
- Scroll, Quai Network, Fuel, Bubblemaps, and many other projects are launching airdrops or continuing reward seasons, each with their own community participation criteria.
- Protocols like Vertex (2.1M SEI tokens) and Derive (200k DRV tokens for liquidity providers) are constantly incentivizing user engagement, while Nodepay and Solayer offer early claim processes or instant TGE distribution public sales.
My view: Airdrops have proven to be an effective way to pave the way for an initial user base, but they are also becoming a "must-have" competitive strategy for new protocols. With so many projects offering incentives, user fatigue may become an issue. The trick for projects is to provide genuine utility, not just rely on "incentive chasing." Over time, protocols need to balance incentives with sustainable token economics. The ideal state is to attract new users through rewards, while also providing them with genuine product value to retain them.
Narrative Overview
BTC Price Trends and Macroeconomic Impacts
The Monday of the first week of the year marked a significant bear trap, with Bitcoin spiking after the New York market open, Coinbase trading at a premium, leading many to believe a bull cycle had begun. However, this proved to be a false signal, as BTC stagnated and plummeted the next day, with other Altcoins following suit.
Key Macroeconomic Factors Driving Uncertainty
- Inflation concerns: The strong January 10th labor market data (NFP report) hinted at potential inflationary pressures, which may reduce expectations of rate cuts—a bearish signal for equities and cryptocurrencies.
- US Dollar Index (DXY): Reached a new high of 110.
- 10-year Treasury yield: Increased from 4.6% to 4.8% (YTD).
- S&P 500 index: Retested pre-election prices.
AI Agent Coins: Correction and Opportunities
AI agent coins that have recently dominated market attention have experienced significant corrections:
- VIRTUAL: Down -57% from its $5.2 billion peak.
- AI16Z: Down -63% from its $2.5 billion peak.
- ZEREBRO: Down -73% from its $820 million peak.
- FAI: Down from $650 million to $500 million.
- AIXBT: Remains near all-time highs despite the market weakness.
- GOAT: Down -55%, still performing poorly.
Emerging Winners
New AI coins are starting to gain attention, including:
- ANON: Increased from $20 million to $240 million
- AVA: Increased from $60 million to $300 million
- PIPPIN: Increased from $15 million to $320 million
Meme Coins: FARTCOIN and Others
FARTCOIN
This meme coin, with some connection to the AI narrative, experienced a -56% correction but has since rebounded +75% from the lows. It is considered a potential market leader, with speculation that its market cap could reach $5 billion or higher.
BUTTHOLE and LLM
- BUTTHOLE: Reached a high of $140 million but has since declined -70%.
- LLM: Related to the AI theme, reached $150 million and then experienced a -75% correction.
XRP Leads the Token Pack
XRP
Outperforming the market, up 6% year-to-date. Ripple's relationship with the upcoming U.S. government and CEO Brad Garlinghouse's connections with key political figures have driven the bullish sentiment.
Other strong performers in this category include:
HBAR
XLM
ADA
Other Notable Trends
Strong Performers
SPX: Broke the $1 billion market cap, reaching $1.6 billion, but is now down -30%.
GIGA: Neared $1 billion, but faced resistance and is down -30%.
SUI: Reached a new all-time high ($5.4 billion FDV), only down -13%.
New Launches
BIO: Launched as the first major DeSci protocol, with a $3 billion FDV, but is now down -55%.
GRASS: Showed strength after weeks of volatile trading.
USUAL: Controversial due to changes in USD0++ redemption, down -66% from its all-time high.
Caution Advised
FTM: Trading contracts were delisted, may have a second chance, but faces major migration issues.
RUNE: Facing risks related to ThorFi lending, reminiscent of LUNA.
Animal meme coins: POPCAT, WIF, and NEIRO are the worst performers YTD, with POPCAT down -73% from its all-time high.
