Institutional Inflows Drive Rally, Innovative TGE Strategies Come with Risks | Frontier Lab Crypto Market Weekly Report

Market Overview

This week, the cryptocurrency market exhibited a volatile trend, with both BTC and ETH showing signs of fluctuating upward movement. The market sentiment index dropped from 70 last week to 63, remaining overall in bullish territory.

Stablecoin Market Dynamics

The total market capitalization of stablecoins showed an upward trend, with USDT declining and USDC rising:

• USDT: Market capitalization reached $186.8 billion, a week-on-week decrease of 0.16%, indicating a renewed net outflow of funds. This suggests that despite the market's volatile upward price trend this week, capital dominated by non-US investors is seeking safe haven and exiting.
• USDC: Market capitalization stands at $75.5 billion, a week-on-week increase of 0.66%. Although the increase this week is not substantial, at only $500 million, it reverses last week's declining trend, indicating that US investors have begun to re-enter the market this week.

BTC Market Trading Volume

BTC market trading activity increased significantly compared to last week. Data shows that the total trading volume of BTC on the two major exchanges, Binance and Coinbase, was 221,221 coins this week, a clear increase from 194,188 coins last week. Specifically, Binance volume rose from 122,354 coins to 139,856 coins, and Coinbase volume increased from 71,834 coins to 81,365 coins, reflecting a warming of investor trading sentiment.

BTC ETF Market Trading Volume

This week, the BTC ETF market also gradually resumed trading volume after the holiday period. Taking BlackRock's IBIT, which holds the largest market share, as an example, its trading volume this week was 298 million shares, an increase from last week's 256 million shares.

Analysis of Market Driving Factors

Institutional Fund Flows Shift to Net Inflow

This week, BTC and ETH spot ETFs and listed treasury companies increased their buying power, reversing the previous trend of continuous decline in purchasing power. Institutions like Fidelity, in particular, saw their buying power rise consistently this week, resulting in total buy volume exceeding sell volume. This indicates a gradual recovery in market investor enthusiasm and that US investors are beginning to re-enter the market.

Macroeconomic Data Meets Expectations

The CPI data released in the US this week met expectations at 2.7%, but the core PCE was 2.6%, below expectations. While this data cannot change the expectation of no Fed rate cut in January, it increases expectations for a Fed rate cut in Q1, thereby boosting market sentiment.

Geopolitical Risks Intensify Market Volatility

The geopolitical conflict between the US and Iran this week was full of twists and turns, shifting from an initially tense situation to a softening of Trump's stance, intensifying severe market volatility. Under these complex international circumstances, many investors this week may sell some assets for risk aversion, which will also impact asset prices.

Policy Expectations and Regulatory Progress

Regulatory Bill Progress Delayed

This week, most investors expected the significant market-impacting "Clarity Act" to pass, but it was announced as delayed. This has affected market investor trading sentiment. Furthermore, Coinbase's statement that the clause limiting stablecoin rewards is "worse than no bill at all" further dampened positive market sentiment.

Fed and Government Disputes Intensify

The escalating dispute between Trump and Powell has made the future path of Fed rate cuts even more uncertain, leading more investors to adopt a cautious, wait-and-see approach towards the market.

Key Event Predictions for Next Week

Macro Data Vacuum Period

In the coming week, there will not be many macroeconomic data releases, creating a brief vacuum in market data.

Institutional Buying Power as a Key Observation Indicator

This week, various BTC and ETH treasury companies and spot ETFs reversed last week's trend of selling exceeding buying, showing buying exceeding selling. This indicates that market sentiment is beginning to improve at this stage. Next week, this should be a key observation indicator to see if it can be sustained.

Continued Focus on Geopolitical Risks

In the coming week, close attention must be paid to the development of the US-Iran geopolitical conflict. This conflict can, to a certain extent, influence market trends in the short term. If war breaks out, it will inevitably have a significant impact on risk markets in the short term.

Market Outlook

Uncertainty Regarding Sustainability of Buying Power

As the buying power of various treasury companies and spot ETFs next week remains an unknown, and is often determined by market trends, it is highly possible that under the influence of unfavorable data, the market may reduce buying power for short-term risk aversion, leading to a rapid decline.

Maintain a Highly Cautious Attitude

Considering multiple factors such as the shift in institutional buying power, changes in policy expectations, and geopolitical risks, investors should maintain a highly cautious attitude, strictly control risk exposure, and prepare defensively to cope with severe market volatility driven by data and geopolitical risks.

Next Week's Prediction Targets

Bearish Targets: ZK, PLUME, XPL

ZK: TVL Plummets 81%, Activity Rate Below 0.1% — Layer 2 Trust Crisis Amid Comprehensive Data Deterioration

Project Fundamentals and Positioning

ZKsync is an Ethereum-based Layer 2 scaling solution aimed at increasing transaction speed and reducing costs on the Ethereum network through zero-knowledge proof technology. Utilizing a Rollup architecture, ZKsync processes transactions off-chain and then submits the results to the Ethereum mainnet for verification in the form of zero-knowledge proofs, achieving faster transactions and lower fees while maintaining Ethereum's security.

Comprehensive Decline in On-Chain Operational Data

• Large-Scale Capital Exodus: ZKsync's TVL has plummeted from a high of $273 million to $36.08 million, a drop of 86.78%, indicating that most capital has withdrawn from the ZKsync ecosystem, severely depleting on-chain liquidity.

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• On-Chain Transaction Activity Nears Stagnation: ZKsync's on-chain DEX trading volume continues to decline, currently maintained at only around $700,000 per day, reflecting extremely low user frequency and a near-complete loss of vitality in the on-chain trading ecosystem.

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• Meager Gas Fee Revenue: ZKsync's daily Gas fee revenue is only about $876, and the total revenue of its ecosystem Dapps is only $11,000 per day. This core indicator directly reflects the almost non-existent practical usage demand on-chain, exhibiting characteristics of a "dead chain."

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• Extremely Low User Activity: Although ZKsync has a total of 10.71 million accounts, only about 5,000 are active, representing an activity rate of less than 0.1%. The number of new accounts continues to decline, indicating users are gradually exiting the ZKsync ecosystem.

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• Stablecoin Market Cap Hits Record Low: The stablecoin market cap on the ZKsync chain has fallen to a historical low of $59.09 million. The continuous downward trend indicates ongoing capital outflow from the chain, further deteriorating the ecosystem's financial foundation.

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Circulating Supply Impact and Selling Pressure Analysis

• Relatively Large Unlock Volume: On January 19, 163.74 million ZK tokens will be unlocked, accounting for 0.78% of the total locked supply. While this proportion is not extremely high, it still constitutes significant pressure in the current market environment.
• Severely Insufficient Market Absorption Capacity: The daily average trading volume of ZK tokens is only about $4.8 million. Relative to the scale of the upcoming unlock, market liquidity is clearly insufficient to effectively absorb the selling pressure, which will impact the price.

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• Strong Selling Motivation Among Unlock Recipients: According to the linear unlock schedule, this unlock primarily involves investment institutions and the project team. Given the project's current clear downtrend, these holders have a strong motivation to cash out and are highly likely to choose to sell and exit.

Summary

The ZKsync project faces multiple systemic risks: At the market level, the entire Layer 2 sector is experiencing a trust crisis, with its scaling value being questioned, and it has failed to establish a differentiated advantage in the fiercely competitive L2 field. At the business level, TVL has plummeted 86.78%, DEX daily trading volume is only $700,000, Gas fee revenue is meager, and active users account for less than 0.1%, completely losing its basic function as a blockchain network. At the capital level, the upcoming unlock of 164 million ZK tokens on January 19 will create significant selling pressure in a weak liquidity market with an average daily trading volume of only $4.8 million. Furthermore, the unlock recipients are investment institutions and the team, who have a strong cashing-out motivation. The叠加 of multiple bearish factors exerts continuous negative pressure on the ZK token price. The project exhibits typical "dead chain" characteristics and is unlikely to reverse its downtrend in the short term.

PLUME: TVL Plummets 94%, On-Chain Activity Approaches Zero — 1.467 Billion Token Unlock Triggers RWA Concept Project Trust Crisis

Project Fundamentals and Positioning

The Plume project is an EVM-compatible Layer 2 blockchain platform focused on Real World Asset Finance (RWAfi). It aims to tokenize traditional financial assets (such as bonds, commodities, real estate, etc.) and introduce them into the DeFi ecosystem, achieving efficient, low-cost, and compliant asset onboarding.

Comprehensive Decline in On-Chain Operational Data

Large-Scale Capital Exodus: Plume's TVL has plummeted from a high of $299 million to $19.18 million, a drop of 93.58%, indicating that the vast majority of capital has withdrawn from the Plume ecosystem, with on-chain liquidity almost completely depleted.

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On-Chain Transaction Activity Nears Stagnation: Plume's on-chain DEX trading volume continues to decline, currently maintained at only around $1,100 per day, which appears even more dismal compared to ZKsync's $700,000 per day. This reflects extremely low user frequency, with the on-chain trading ecosystem having essentially lost all vitality.

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Negligible Gas Fee Revenue: Plume's daily on-chain fees are only about $370, far lower than ZKsync's $876. This core indicator directly reflects the almost complete lack of practical usage demand on-chain, fully exhibiting "dead chain" characteristics.

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Cliff-Like Decline in Ecosystem Application Revenue: The total revenue of projects within the Plume on-chain ecosystem is only about $600 per day, a huge gap compared to ZKsync's $11,000 per day, indicating the entire ecosystem has lost commercial value and sustainability.

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Circulating Supply Impact and Selling Pressure Analysis

Extremely Large Unlock Volume: On January 21, 1.467 billion PLUME tokens will be unlocked, accounting for 14.68% of the total locked supply. This proportion far exceeds ZKsync's 0.78%, constituting an extremely severe selling pressure.

Severely Lacking Market Absorption Capacity: The daily average trading volume of PLUME tokens is only about $3 million. Relative to the scale of the upcoming unlock, market liquidity is completely unable to effectively absorb such massive selling pressure, which will have a devastating impact on the price.

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Extremely Strong Selling Motivation Among Unlock Recipients: According to the linear unlock schedule, this unlock primarily involves investment institutions and the project team. Given the project's current severely deteriorating downtrend, these holders have an extremely strong motivation to cash out and are almost certain to choose large-scale selling and exit.

Summary

The Plume project faces even more severe multiple systemic risks than ZKsync: At the market level, while the RWA sector has long-term value, it lacks sufficient attention in the current market environment, and the project has failed to effectively activate user participation. At the business level, TVL has plummeted 93.58%, DEX daily trading volume is only $1,100, on-chain fees are a meager $370 per day, and ecosystem application revenue is only $600 per day, completely losing its basic function as a blockchain network. At the capital level, the upcoming unlock of 1.467 billion PLUME tokens (14.68% of supply) on January 21 will create devastating selling pressure in an extremely weak liquidity market with an average daily trading volume of only $3 million. Furthermore, the unlock recipients are investment institutions and the team, who have an extremely strong cashing-out motivation. The叠加 of multiple extreme bearish factors exerts continuous devastating pressure on the PLUME token price. The project exhibits very severe "dead chain" characteristics and is almost impossible to reverse its downtrend in the short term. Investors should be highly vigilant of the associated risks.

XPL: Stablecoin Public Chain Ecosystem Collapses Comprehensively — TVL Plummets 49% Coupled with 88.88 Million Token Unlock Triggers Liquidity Crisis

Project Fundamentals and Positioning

Plasma is a high-performance Layer 1 public chain specifically designed for stablecoin payments, aiming to solve four major problems in current stablecoin transfers: high transaction fees, poor user experience, low level of functional abstraction, and slow settlement speeds. Its core goal is to provide low-latency, high-throughput transaction capabilities to meet the strict performance and reliability requirements of financial infrastructure.

Severe Deterioration in Fundamental Data

• Continuous TVL Contraction: Plasma's Total Value Locked has significantly decreased from a peak of $6.358 billion to $3.369 billion, a drop of 47.01%, indicating capital is continuously flowing out of the Plasma ecosystem, with on-chain users withdrawing on a large scale.

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