Bright spots and dark spots in a downtrend

Here is the English translation of the text, with the terms in <> retained as is: The stability of the market and the emergence of new projects will be key factors. Market Overview Overall Market Situation This week, the cryptocurrency market has been in a rapid downward trend, with the market sentiment index falling from 33% to 11%. The market capitalization of stablecoins has basically stopped growing (USDT reached $142 billion, USDC reached $55.9 billion, with growth rates of 0.02% and -0.53% respectively), indicating that as the market experiences a severe decline, institutional capital has stopped entering and started to exit; the panic in the market is mainly due to the hacking of Bybit exchange, which resulted in the loss of $1.5 billion in assets, as well as Trump's aggressive tariff policy, which has increased concerns about inflation and reduced the likelihood of the Fed cutting interest rates, heightening concerns about the US entering an economic recession, thereby having a strong impact on market sentiment, causing the overall market sentiment to fall into extreme panic, and Altcoins generally underperforming the benchmark index. Forecast Targets for Next Week Bullish Targets: LTC, S, SOSO, BERA LTC: This week, LTC bucked the trend and rose, outperforming the overall market which was declining. This is mainly due to the market's increased expectations for the approval of the LTC ETF. Canary Capital has already listed the spot LTC ETF on the custody trust and settlement company (DTCC) system, and LTC has obtained an 87% staking approval on Polymarkt. The market currently has high expectations for the approval of the spot LTC ETF, so there will be repeated hype around the LTC spot ETF event before it is officially approved. S: Sonic has recently started to enter the DeFi industry, attracting a large number of on-chain users and funds to Sonic through the high APY of its on-chain DeFi projects. On its main liquidity staking projects Beets and Origin, the APY of the liquidity pools based on the S token can reach as high as 32.22% and 123% respectively. The average borrowing rate of S token on Sonic's lending protocol is 10.21%, allowing users to obtain a return of over 20%. Combined with the recent increase in market demand for the S token due to the boom on the Sonic chain, this has led to an upward trend in the S token price against the overall market decline, further increasing the risk-free returns for users on the Sonic chain and attracting more users to participate through borrowing, driving a spiral-like upward trend in the S token price. SOSO: The SoSoValue project team is able to continuously adjust the future development direction of the project based on market trends. SoSoValue originally positioned itself as an AI-powered one-stop investment service platform, but after the AI agent market declined, the market's attention and capital began to shift back to DeFi projects. SoSoValue then repositioned itself as a wealth management center, hiding its AI technology in the products but focusing on promoting its ability to provide high APY. Recently, it has launched a second season mining activity, where users can earn up to 42% APY by holding or staking the SSI index token, further increasing user participation and bullish expectations for the SOSO token. BERA: Although BERA was initially affected by the overall market decline, the Berachain project team quickly adjusted the staking yield of the on-chain LSD project. The main LSD project Infrared Finance on the Berachain has increased the APY of WBERA to as high as 123%, and the borrowing rate of BERA on its lending project has reached 23.68%, allowing arbitrage users to earn a 100% risk-free annualized return, quickly reversing the downward trend and turning it into an upward one. The strategy adopted by the Berachain project team is similar to that of Sonic, using high APY to attract on-chain users and capital, thereby achieving the process of staking/locking, liquidity release, DeFi empowerment, and token appreciation, with the aim of increasing market demand for the BERA token and driving its price upward. Bearish Targets: ETH, SOL, ADA, AI, TKO, RUNE ETH: This week, Bybit was hacked and lost 491,000 ETH. Although Bybit has now fully replenished the stolen ETH through purchases and redemptions, the purchasing power has not been reflected in the price, indicating that investors still have FUD sentiment towards ETH. After the Bybit hack, the investigation report clearly stated that the incident was mainly due to a vulnerability in the safe technology, which has caused market doubts about the safety of the Ethereum ecosystem. In addition, the upcoming Ethereum Pectra upgrade will be launched on the testnet this weekend, and according to past experience, there will likely be a pump before the technical upgrade, followed by a pullback after the upgrade is implemented, as the Pectra upgrade has not injected much momentum into the ETH price. SOL: This week, SOL has experienced a significant decline, following the overall market trend. This is mainly due to the recent retreat of the meme coin craze, as Solana, being the public chain with the highest meme coin returns, has also been affected by various FUD voices in the market, causing capital to start fleeing the Solana ecosystem. Solana's TVL has dropped from $12.1 billion to $7.3 billion, a 39.66% decline, and the liquidity staking yield has dropped from 10.29% to 7.26%, while the on-chain trading volume has plummeted by 93.23%. This indicates that Solana's on-chain ecosystem is close to collapse. Additionally, 112 million SOL will be unlocked on March 1, which are held by institutions and may continue to be sold, exacerbating investor panic towards SOL. ADA: This week, Cardano's on-chain TVL has experienced a large-scale decline of 26.88%, dropping to $308 million from its peak of $701 million, a 56.06% drop. The TVL of all ecosystem projects on Cardano has declined by more than 10%, indicating that on-chain capital is rapidly flowing out of the Cardano ecosystem, reflecting market FUD towards the Cardano ecosystem. Cardano's on-chain DEX trading volume has also dropped by more than 68%, and the borrowing rate for the ADA token is only 3.29%, far lower than other public chain tokens, suggesting a lack of participation in lending on the Cardano chain. If the outflow of capital from the Cardano ecosystem continues, ADA is expected to continue declining next week. AI: Sleepless AI is a Gamefi project based on AI, and the AI and Gamefi sectors it occupies have seen the deepest pullbacks in this downturn, as market investors have lost interest in the Play-to-Earn model of Gamefi projects, with user participation declining and little new capital inflow. Additionally, AI projects are generally considered to be overvalued, and the AI sector has been in a significant downward adjustment. Furthermore, AI will unlock 17.27 million tokens next week, accounting for 1.73% of the current circulating supply, which is a relatively large unlock ratio. Combined with the current unfavorable conditions in the AI sector, AI is expected to see a decline after the token unlock. TKO: Tokocrypto is the largest cryptocurrency exchange in Southeast Asia. Due to the recent Bybit hack incident, the tokens of various centralized exchanges have not performed well. Additionally, TKO will unlock 100 million tokens next week, accounting for 2.02% of the current circulating supply, which is a relatively large unlock ratio. Therefore, TKO is expected to decline after the token unlock.

RUNE: THORChain is a decentralized cross-chain AMM trading protocol. This week, it experienced a significant upward trend from Monday to Wednesday, mainly due to the hacker who stole from Bybit continuously transferring the stolen ETH to THORChain and conducting money laundering transactions on THORChain, causing a significant increase in THORChain's trading volume and transaction fees. This led to THORChain not following the overall market's downward trend. After the market exposed the hacker's use of THORChain for money laundering, THORChain's developer Pluto announced his resignation, and it is expected that the coin price will continue to decline next week due to the reduction in trading volume and market FUD regarding the alleged money laundering activities.

Market Sentiment Index Analysis

The market sentiment index has declined from 33% last week to 11%, overall in the near-extreme fear zone.

Hot Tracks

Sonic

Current Situation

In the past few weeks, Sonic chain's TVL has maintained a high-speed growth trend, and this week, the TVL of most chains on the chain is in a downward trend, Sonic is the only chain that has maintained a 10% growth rate among the chains with a TVL of over $50 million, with a growth rate of 10.32% this week, and the chain's TVL has grown to $6.83 billion. This shows that even in the extremely bearish market, Sonic's ecosystem is still experiencing continuous capital inflows, and Sonic's token S also rose by 7.63% this week. Although the increase is not high, the fact that it can rise in the context of a market crash also indicates the market's recognition of it.

Reasons for the Heat

Sonic has recently shifted the focus of its project from GameFi to DeFi, adopting a high-APY strategy to attract users on the chain. In its main liquidity projects on the chain, it can provide users with up to 123% APY, and in the lending sector, it provides users with around 10% lending rates, allowing users to achieve a maximum of 100%+ arbitrage APY. In the current downward market, the over 100% APY has a very strong appeal to users on the chain, prompting them to choose to buy or borrow tokens to participate in arbitrage, increasing the demand for the token S, and resulting in a better performance of S compared to most other altcoins.

Future Outlook

We can see from the recent heat of the Sonic ecosystem that it is mainly due to the Sonic ecosystem's LSD projects increasing the annualized yield, attracting more chain users to participate in arbitrage activities. So we can see that the path for an ecosystem to develop rapidly is to achieve efficient driving of its economic flywheel. The project team has shifted its focus to the DeFi track, realizing asset empowerment. In this regard, asset staking and liquidity are the key, allowing assets to generate compound returns in DEX, lending, and asset management. The economic flywheel of the chain ecosystem must be formed through: staking + liquidity + DeFi empowerment + user growth. The core driving force is the dual-wheel drive of the chain's native token staking and liquidity release, allowing it to generate compound returns in scenarios such as DEX, lending, and asset management, realizing "staking is productivity". After users are attracted to the chain ecosystem by high APY, a positive cycle of staking/locking -> liquidity release -> DeFi empowerment -> token appreciation -> user inflow -> re-staking -> developer aggregation must be formed. Otherwise, if the capital of new entrants is insufficient to cover the selling pressure of arbitrageurs, the token price will decline, and the yield of various projects will inevitably decrease, causing the arbitrageurs to exit. This would be a huge blow to the ecosystem, so we need to continue to pay attention to the APY of DeFi projects on the Sonic chain in the future to judge whether it still has the power to develop.

However, it is worth noting that although Sonic's TVL was the fastest growing among all chains with over $100 million this week, its TVL did not rise steadily, but experienced a rebound after a high.

Berachain

Current Situation

This week, the entire market was in a rapid downward trend, and the top 10 projects by TVL, except for Berachain, were all in a downward trend. Although Berachain's TVL increase this week was only 4.66%, it is still not easy to maintain positive growth in the current environment, with a TVL of $31.94 billion, ranking sixth among all public chain TVLs, surpassing Base chain. Its token BERA also maintained an upward trend this week, with an increase of 7.26%, in a strong position among altcoins.

Reasons for the Heat

This week, the growth rate of the TVL of Berachain's top DEX, Lending, and LSD projects has slowed down, and Berachain's TVL even declined in the first half of the week. However, due to the fact that Berachain's main LSD project Infrared Finance has raised the APY of WBERA to a maximum of 121%, and the emerging LSD project Stride has raised the APY to 190.12%, while the lending rate for borrowing BERA on Berachain's lending projects is 23.68%, allowing arbitrage users to earn a 100% risk-free annualized return, this quickly curbed the downward trend and turned it into an upward trend.

Future Outlook

Berachain's continued heat this week is mainly due to the increase in APY of its DeFi projects, which continues to have a strong appeal to users on the chain, causing a large amount of chain users to invest their funds in Berachain. Berachain's development path is similar to Sonic, so the problems it faces are also similar to Sonic. At the current stage, Berachain has realized the process of staking/locking -> liquidity release -> DeFi empowerment -> token appreciation, but it has not shown outstanding chain projects in the process of user inflow -> re-staking -> developer aggregation. Therefore, although this high-yield model can enable the Berachain ecosystem to develop rapidly in the short term and promote the rapid rise of the project token BERA, it will inevitably face increasing selling pressure in the future. When the capital of new entrants is insufficient to cover the selling pressure of arbitrageurs, the BERA token price will decline, and the yield of various projects will inevitably decrease, causing the arbitrageurs to exit. Therefore, in the future, we should pay more attention to whether there are new star projects appearing on the Berachain chain, as well as whether the interest rates of LSD projects on the chain have dropped significantly.

Overall Market Theme Overview

Data Source: SoSoValue

Based on weekly returns, the Sociafi track performed the best, while the PayFi track performed the worst.

• Sociafi track: In the Sociafi track, TON and CHZ account for a relatively large proportion, totaling 95.17%, and their declines this week were -4.86% and -4.79% respectively, which, although in a downward trend, were still better than the performance of other altcoins, leading to the best overall performance of the Sociafi track index.

• PayFi track: In the PayFi track, XRP, LTC, and XLM account for a relatively large proportion, totaling 94.62%, and their declines this week were -19.23%, -1.21%, and -16.96% respectively, causing the PayFi track to perform the worst.

Preview of Major Crypto Events Next Week

• Monday (March 3): US February ISM Manufacturing PMI

• Wednesday (March 5): US February ADP Employment; Pectra network upgrade plan launched on Ethereum testnet

• Friday (March 7): US February Seasonally Adjusted Non-Farm Payrolls; US February Unemployment Rate

Summary

This week, the cryptocurrency market experienced a significant decline, with the market sentiment index plummeting, indicating widespread investor concerns. However, some projects such as LTC, Sonic, SoSoValue, and Berachain have attracted users through high-APY strategies. In the long run, market stability and the emergence of new projects will be key factors. Investors are advised to closely monitor market dynamics and operate cautiously.