Historically, February has been a strong month for Bitcoin in post-halving years.

• 2017 and 2021 Cycles: BTC dipped in January before resuming an uptrend in February.
• 2025 Prediction: If history repeats itself, we could see a similar rally this year.

Speculation is brewing about executive orders related to Bitcoin in the coming months.

While unconfirmed, such events have historically acted as market movers.

Let’s dive in👇🧵

Sector Overview

1. Infrastructure & Interoperability

Reduce Network Tribalism with Cross-Chain Connectivity

We’re seeing an acceleration in cross-chain development—projects like Superposition (an Arbitrum L3) and Abstract (integrating Stargate’s Hydra) are rolling out solutions to make asset transfers and data sharing more efficient. LayerZero is expanding its reach, enabling apps on Superposition to tap liquidity from over 100 connected chains. Meanwhile, Arcana Network partnered with Scroll to let users pay gas fees in stablecoins (USDC/USDT) across any chain, a step that significantly streamlines user onboarding.

My take: This underscores a sustained push for frictionless interoperability. The ability to seamlessly move assets and data across chains (L1 → L2 → L3) is quickly becoming table stakes. Projects that can integrate user-friendly UI, gas abstraction, and universal bridging stand to reduce the “network tribalism” that has historically slowed DeFi adoption. Expect further standardization and possibly more specialized L3 rollouts tailor-made for unique verticals (e.g., gaming, RWA, institutional DeFi).

2. Liquidity, Lending & Real-World Assets

Holy Grail for Credit and Loan Ecosystem

What’s happening:

• Coinbase introduced BTC-backed loans for U.S. users, offering a more mainstream audience the ability to leverage their Bitcoin.
• Tradable integrated with ZKsync to bring $1.7 billion in tokenized private credit (RWA) to the network, illustrating how institutional-grade products are nudging further into DeFi.
• @plumenetwork amassed over $4.5 billion in committed asset for tokenization, $64M in TVL even before network goes live and launched a $25M RWAfi eco fund

My take: The blurring line between CeFi and DeFi is a prime example of the sector’s maturation. Coinbase’s pivot into crypto-backed lending shows a willingness from centralized exchanges to provide products typically associated with DeFi platforms—potentially eating into DeFi’s direct user base but also validating on-chain lending as a critical financial instrument. Moreover, RWA integration remains the “holy grail” for bridging legacy finance with on-chain liquidity. If this trend maintains momentum, DeFi could see more robust yields, deeper liquidity, and higher institutional confidence, albeit with increased regulatory oversight.

3. Liquid Staking & Synthetic Bitcoin

Innovation in Staking Mechanisms

What’s happening:

• @babylonlabs_io launched $YBTC, a liquid staking token backed 1:1 by BTC, integrated with pSTAKE.
• @BrahmaFi introduced the Onchain+ initiative, bundling multi-chain strategies and an AI agent (ConsoleKit) for automated DeFi actions.

My take: Liquid staking has proven a gateway to unlock additional yield for stakers without forfeiting liquidity. By tokenizing staked assets (BTC, ETH, or otherwise), DeFi participants can leverage them as collateral or trade them freely. This “double-dip” approach—earn staking rewards plus potential DeFi yields—will likely continue to accelerate. However, there’s an inherent risk: the more times an asset is “liquid staked,” the deeper the complexity in the system. Protocols must remain transparent and well-audited to prevent hidden leverage from undermining stability.

4. Ecosystem Expansions & Strategic Partnerships

Major Onboarding Efforts & Corporate Collaborations

What’s happening:

• Polygon Labs teamed up with Reliance Jio, India’s largest telco (450+ million users), to integrate blockchain solutions into Jio apps.
• Ledger integrated Uniswap into Ledger Live Desktop, boosting the user experience for hardware wallet enthusiasts.
• Abstract prepared its Mainnet, hinting at a new wave of multi-chain products.

5. Airdrops, Incentives & Liquidity Mining

Competition for User Adoption

What’s happening:

• Scroll, Quai Network, Fuel, Bubblemaps, and numerous others are rolling out airdrops or continuing reward seasons, each with its own community participation criteria.
• Protocols like Vertex (2.1M $SEI tokens) and Derive (2M $DRV for liquidity providers) keep incentivizing user engagement, while Nodepay and Solayer offer early-claim processes or public sales with immediate TGE distributions.

My take: Airdrops have proven effective at seeding initial user bases, but they’re also turning into a “must-have” competitive strategy for new protocols. With so many projects offering incentives, user fatigue could be an issue. The trick for projects is to layer on real utility rather than rely solely on “incentive chasing.” Over time, protocols need to balance incentives with sustainable tokenomics. The sweet spot: rewards that bring in new users while retaining them for genuine product value.

Narrative Overview

$BTC Price Action and Macro Influence

The first Monday of the year was marked by a significant bull trap. Bitcoin ($BTC) surged following the New York market open, with Coinbase trading at a premium, leading many to believe a bullish period was underway. However, this proved to be a false signal as BTC stalled and dumped hard the next day, with altcoins following suit.

Key Macro Factors Driving Uncertainty

• Inflation Concerns: Strong labor market data from January 10 (NFP report) suggests potential inflationary pressures, which could lead to fewer rate cuts—a bearish signal for equities and crypto.
• Dollar Index (DXY): Reached new highs at 110.
• 10-Year Treasury Yields: Rose from 4.6% to 4.8% YTD.
• S&P 500: Retested pre-election prices.

AI Agent Coins: Correction and Opportunities

AI agent coins, which dominated market attention recently, saw significant corrections:

• $VIRTUAL: Down -57% from its $5.2B top.
• $AI16Z: Down -63% from its $2.5B top.
• $ZEREBRO: Down -73% from its $820M top.
• $FAI: Down to $500M from its $650M top.
• $AIXBT: Near ATH despite market weakness.
• $GOAT: Down -55% and remains a weak performer.

Emerging Winners

New AI coins gained traction, including:

• $ANON: $20M → $240M
• $AVA: $60M → $300M
• $PIPPIN: $15M → $320M

Memecoins: $FARTCOIN and More

$FARTCOIN

This memecoin, loosely tied to the AI narrative, experienced a -56% drawdown but rebounded +75% from its lows. It stands out as a potential market leader, with some speculating it could reach $5B mcap or higher.

$BUTTHOLE and $LLM

• $BUTTHOLE: Peaked at $140M but down -70%.
• $LLM: Tied to AI meta, hit $150M before a -75% drawdown.

Dino Coins/USA Coins Lead by $XRP

$XRP

• Outperformed the market, up 6% YTD.
• Ripple’s association with the incoming US administration and CEO Brad Garlinghouse’s connections with key political figures have fueled bullish sentiment.

Other strong performers in this category include:

• $HBAR
• $XLM
• $ADA

Other Notable Trends

Strong Performers

• $SPX: Broke $1B mcap and hit $1.6B, now down -30%.
• $GIGA: Almost reached $1B but faced resistance, down -30%.
• $SUI: Hit a new ATH at $54B FDV, down only -13%.

New Launches

• $BIO: Launched as the first major DeSci protocol with a $3B FDV but is now down -55%.
• $GRASS: Showing strength after weeks of range-bound trading.
• $USUAL: Controversy over USD0++ redemption changes caused a -66% drop from ATH.

To Exercise Caution

• $FTM: Trading contracts delisted, with potential for a second life but significant migration issues.
• $RUNE: Facing risks related to ThorFi lending, drawing comparisons to LUNA.
• Animal Memecoins: $POPCAT, $WIF, and $NEIRO have been among the worst performers YTD, with $POPCAT down -73% from ATH.

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