AI Weekly Hotspot Report (12.20 - 12.27)

> You are reading the weekly industry hot report generated for you by Gate.io AI Lab. Check out the most noteworthy market trends and important events from last week, and get investment analysis and financial strategies recommended to you. > > Word count: 9890 words | Reading time 13.4 minutes.

1. Market Trends

1.1. Market Sentiment

This week, the total market capitalization of cryptocurrencies reached $1.02 trillion, an increase of 3.21% compared to the previous period. The trading volume on exchanges increased by 5.78%, reaching $1.45 trillion. The price of Bitcoin fluctuated around $95,000 with increased trading volume. The overall market is showing a cautious upward trend, and investors remain optimistic about the future of cryptocurrencies.

Today's Fear and Greed Index is 74, with a greed level. Compared to yesterday, the market sentiment has cooled down, but overall it is still in a greedy state.

> Crypto & Tradition Overview as of 12am UTC+8, Dec 27

1.2. Macroeconomic Impact

Recent data shows that global economic recovery is slowing down, and inflationary pressures persist. The US November CPI rose 7.1% year-on-year, higher than the expected 7.3% but lower than October's 7.7%, indicating a slight easing of inflationary pressures. The initial value of the Eurozone November CPI was 10.0% year-on-year, higher than the expected 9.6%, reaching a historic high. The final value of the US December Manufacturing PMI was 46.2, lower than the expected 47.7, marking the second consecutive month of contraction. The initial value of the Eurozone December Manufacturing PMI was 47.8, higher than the expected 47.1, but still in the contraction zone.

The producer price index and the consumer price index are highly correlated. The US PPI rose by 7.4% year-on-year in November, lower than the expected 7.2%, indicating that the inflationary pressure on the production side has eased somewhat and is expected to be transmitted to the consumer side. As a leading indicator of the economy, the PMI for both manufacturing and services has remained below 50, indicating a further slowdown in the economy.

The current federal fund rate in the United States is in the range of 4.25% to 4.5%. According to CME Group's FedWatch tool, the market expects a 91.4% probability that the Federal Reserve will remain unchanged in January 2025, and an 8.6% probability of a 25 basis point rate hike. The European Central Bank raised rates by 50 basis points in December, bringing all three rates to 2.5%. The market expects the European Central Bank to raise rates by another 50 basis points in January 2025.

Overall, although the inflation pressure has eased somewhat, it is still at a high level. The expectation of economic slowdown may intensify, and the cryptocurrency market may face greater volatility.

1.3 Financial Calendar

The December ISM Manufacturing PMI in the United States is an important indicator of US manufacturing activity, reflecting the expansion or contraction of the manufacturing industry and playing an important indicative role in economic trends, and therefore rated as high-importance data.

The number of initial jobless claims in the United States as of the week ending December 28 reflects the latest changes in the U.S. labor market, which is of reference value for assessing economic conditions and the direction of the Federal Reserve's monetary policy, and is also rated as high-importance data.

The December Caixin Manufacturing PMI and official Manufacturing PMI data in China reflect the operation of the manufacturing industry in China, which is of guiding significance for judging the economic growth prospects and is rated as medium importance data.

Other data such as trade data, real estate data, etc. are rated as having low or very low importance, and have a relatively small impact on the macroeconomy.

2. Analysis of Funds and Price Fluctuations

2.1. Price Fluctuation Analysis

BTC Volatility Based on the daily closing prices of BTC in the past week, the weekly volatility of BTC is 2.74%.

Price fluctuations and reasons This week, the price of BTC fluctuated in the range of $95,000 to $99,500. The price increase was mainly driven by the entry of institutional investors, the approval of Bitcoin ETFs, and other favorable factors. The later decline may be due to profit-taking and whale selling.

Trading Volume Changes Impact An increase in trading volume usually means increased market activity. This week, BTC trading volume has increased, indicating a higher level of market participation. However, this is also accompanied by significant price fluctuations.

Market Activity and Potential Price Direction On-chain data shows that whales have transferred a large amount of BTC to exchanges this week, which may indicate increased selling pressure. However, on the other hand, the extended holding period of investors also demonstrates a firm intention to hold. Therefore, BTC prices may remain volatile in the short term, but there is still room for growth in the medium to long term.

The data quoted in this report is from public market information, and the analysis results do not constitute investment advice. The copyright of this report belongs to Crypto Daily. It is not allowed to reprint or use it in any form without authorization.

2.2. Funds Analysis

According to the Direction Of Funds data, the recent influx of funds is mainly concentrated in cryptocurrencies such as VIRTUAL, THE, and RENDER. Among them, VIRTUAL had a net inflow of 4.876 billion US dollars on December 27, 2024, THE had a net inflow of 1.595 billion US dollars on the same day, and RENDER had a net inflow of 220 million US dollars.

Major Cryptocurrency Performances: Bitcoin experienced significant fluctuations around Christmas, with a 3% drop in price to $95,900 on December 27, 2024. Ethereum saw a slight decline on the same day, but has shown an overall upward trend recently. Ripple fell by over 6% on December 27, 2024.

Market Activity: According to the data, on December 27, 2024, the total amount of liquidation on the entire network was approximately 274 million US dollars, with long positions liquidating 231 million US dollars and short positions liquidating 42.26 million US dollars. The overall market activity is high, and investor sentiment is divided.

Investor Group Analysis: From the perspective of fund flow, institutional investors' funds flow more into VIRTUAL and THE and other cryptocurrencies, while retail investors prefer popular concept currencies such as RENDER. Overall, institutional investors tend to be more cautious, while retail investors are chasing hot concepts.

2.3. Smart Money Analysis

The flow of smart money often predicts the market trend. By analyzing the changes in large volume transactions, we can gain insights into the movement of institutional funds.

BTC: Recently, there has been an increase in the volume of large BTC transactions, indicating that institutional funds are flowing in. This suggests that the bullish force is strong and there is room for further upside in the future. However, there are also some major players selling to take profits, and the selling pressure should not be ignored. Overall, the bullish side has the advantage.

ETH: The large trading volume of ETH shows a two-way fluctuation, with institutional funds flowing in and out. This reflects the market's divergence on ETH, and the short-term pattern may continue to be volatile. However, the long-term positive trend remains unchanged.

SOL: The large single transaction volume of SOL has recently increased significantly, indicating that institutional funds are buying in large quantities. This may be related to the optimistic outlook for its ecological development. It is expected that SOL will continue its upward trend in the future market.

DOGE: The recent decrease in the volume of large transactions of DOGE indicates that institutional funds are withdrawing. This may be related to its lack of practical application value. The future market of DOGE may be under pressure to decline.

Overall, smart money is flowing into mainstream currencies such as BTC, ETH, and SOL, while maintaining a cautious attitude towards DOGE and other altcoins. This reflects the market's trend towards rationality and increasing favor towards projects with practical utility value.

3. Hot Topics

The advent of the era of artificial intelligence agents: AI16Z leads the new wave of cryptocurrency

The Rise of Artificial Intelligence Agents: AI16Z Becomes the Leader on the Crest of the Wave

In the past week, the most popular topic in the cryptocurrency market is undoubtedly the rise of AI agents. As a pioneer in this emerging field, the AI16Z project has become the focus of the market. AI16Z is a decentralized AI agent platform based on Solana, launched by the well-known venture capital firm Andreessen Horowitz (a16z). It aims to create a token-based economic framework for AI agent free market collaboration.

AI16Z tokens have surged in price over the past week, with a market value surpassing $1 billion, reaching a historic high. According to GMGN market data, as of December 27th, AI16Z's 24-hour increase was as high as 46.93%. This is mainly due to AI16Z's collaboration with Stanford University in researching AI Agent mutual trust framework, multi-AI Agent ecosystem framework, and decentralized AI Agent DAO governance framework.

"The rise of AI16Z marks a new era in the cryptocurrency industry." Chris Dixon, a partner at Andreessen Horowitz, stated in an interview that "AI agents will become a killer application for blockchain technology, and AI16Z will lead this wave."

The Perfect Combination of AI Agents and Blockchain: The Key Role of TEE Technology

The rise of AI agents is inseparable from a key technology - Trusted Execution Environment (TEE). TEE can provide a secure isolated computing environment for AI agents, ensuring the security of their private keys and data. This enables AI agents to autonomously execute various tasks on the blockchain without exposing their private keys.

In this field, Phala Network is one of the earliest projects to layout TEE technology. Phala Network adopts a mature TEE solution and applies it to blockchain. This enables Phala Network to be selected by AI16Z and become its underlying technology support in a short period of time.

"TEE technology paves the way for the development of AI agents on the blockchain. "Phala and AI16Z's partnership marks the official entry of TEE technology into the mainstream, which will have a profound impact on the entire cryptocurrency industry." "

The market is a mix of frenzy and rational analysis

The concept of AI agents has led to significant price fluctuations in related tokens in the short term. In addition to AI16Z, the token prices of AI agent projects such as AgentLayer and Virtual have also experienced varying degrees of increase.

However, market analysts are not overly optimistic about this. Renowned analyst Lark Davis stated on social media: "AI agents are indeed an emerging field worth paying attention to, but currently, most projects are still in the conceptual stage. We need to remain rational and patient."

"The development prospects of AI agents have been overhyped." Another analyst, Ki Young Ju, takes a cautious stance, stating that "at this stage, investors should adopt a wait-and-see attitude towards this field and wait for the real delivery of projects."

Looking Ahead: AI Proxies Will Bring New Opportunities to Cryptocurrency

Despite the differences, most people believe that the rise of AI agents will bring new opportunities for the cryptocurrency industry.

"AI agents will drive the large-scale adoption of blockchain technology. "They can play a role in finance, gaming, social networking, and more, contributing to the democratization of cryptocurrencies." "

Marvin Tong also has a deep understanding of this: "TEE technology will be a key support for the development of AI agents, and Phala Network will play an important role in this process. We are confident in contributing our own strength to the industry."

Overall, AI agents have brought new vitality to the cryptocurrency industry. Although there are still many controversies at this stage, the future development prospects of this field are worth looking forward to.

4. Main Events

Here are the Top 15 events that have had a significant impact on the cryptocurrency market in the past seven days:

2024-12-27 Bitcoin Token Aging

The 30-day and 365-day moving averages of the average age of Bitcoin tokens continue to rise, indicating that investors tend to hold them for the long term. This may be a positive signal for the rise in Bitcoin prices. Data shows that nearly one-third of Bitcoin tokens have not been traded for over five years in circulation.

2024-12-27 Jito Validator Income Sets Record

Jito reported more than $100 million in validator priority fees and tips in November and December, and set a monthly revenue record of about $210 million in November. This is a reflection of how active the Solana ecosystem is.

2024-12-27 KULR buys $21 million in Bitcoin

Listed company KULR Technology has launched a Bitcoin reserve strategy, spending $21 million to purchase about 217 Bitcoins at an average unit price of $96,556. This indicates the continued demand for Bitcoin among institutions.

2024-12-27 Wise and Strive apply for Bitcoin company ETF

Wise and Strive Financial have applied to create ETFs, which invest in companies holding a large amount of Bitcoin, such as MicroStrategy. This is expected to further drive institutional investors' participation in the Bitcoin market.

2024-12-27 MicroStrategy's increase in holdings this week hits a new low

Analysts pointed out that MicroStrategy increased its holdings by 5262 bitcoins this week, which is the smallest purchase quantity in recent weeks, sparking market doubts about its buying intentions. This may affect the price trend of Bitcoin.

2024-12-27 Meme Project BONK Burns 1.69 Trillion Tokens

Meme project BONK announced that, through community voting, 16.9 trillion BONK were burned from the multi-signature wallet, reducing the total supply to 91 trillion. This helps to increase the scarcity of the token.

2024-12-27 USDC Treasury minting 300 million USDC

Within the past 3 hours, USDC Treasury has added 300 million USDC minted on the Ethereum network. This may be related to institutional investor activity, and it is worth paying attention to its impact on the market.

2024-12-26 Solana Ecological Creator Platform Banger Launches V2

Solana ecosystem creator platform Banger has launched version V2, adding features such as fungible tokens and automatic market replies, which are expected to further promote the development of the Solana ecosystem.

2024-12-26 Runes trading on the Bitcoin blockchain has dropped to 3-5%.

According to reports, the proportion of Runes transactions on the Bitcoin blockchain has dropped to 3-5%, which is lower than the 80% when it was launched. This reflects the decrease in the usage rate of Runes on the Bitcoin blockchain.

2024-12-26 OpenAI service almost fully restored

OpenAI announced on the X platform that its services have now been almost fully restored. Previously, services such as ChatGPT and API experienced interruptions.

2024-12-26 Japanese Prime Minister: No Consideration to Use Bitcoin as a Strategic Reserve for Now

The Japanese Prime Minister stated that there is currently insufficient information to consider Bitcoin as a strategic reserve. This indicates that the Japanese government is cautious about including Bitcoin in the national reserve.

2024-12-25 GT on-chain mining staking amount exceeds 36 million coins

The latest on-chain data shows that the GT on-chain mining staking amount has reached 36,394,105.71 tokens (about 5.07 billion US dollars), reaching a new high. This reflects the level of activity in the GT ecosystem.

In 2024, Israel will launch six mutual funds that track the price of Bitcoin

According to reports, six mutual funds tracking the price of Bitcoin will be listed in Israel next week. This will provide Israeli investors with more channels to participate in the Bitcoin market.

On December 25, 2024, Brazil may ban self-hosted stablecoins.

Brazil's central bank is expected to complete public consultations on a potential ban in February next year, and several executives have assessed the potential impact of the ban on local markets. This may affect the development of the Brazilian stablecoin market.

5. Global Policies

The following is a list of new political dynamics, economic policies or regulations related to the cryptocurrency industry, as well as an analysis of their impact on the industry and the market, based on the news from December 20 to 27, 2024.

US policy shifts towards supporting cryptocurrencies

Description

After Donald Trump is re-elected as President of the United States in 2024, his government promises to make significant contributions to the cryptocurrency industry. Trump has nominated supporters of cryptocurrency such as Paul Atkins to serve as the Chairman of the U.S. Securities and Exchange Commission (SEC).

Impact analysis

The Trump administration's friendly stance towards cryptocurrency marks a positive shift in US policy towards the cryptocurrency market. This may promote improvements in the regulatory environment, and foster cryptocurrency innovation and growth. Newly appointed SEC cryptocurrency supporters are expected to relax regulations, creating favorable conditions for industry development.

Brazil considers banning the transfer of stablecoins to self-custody wallets

Description

As more and more Brazilian citizens use stablecoins pegged to the US dollar to hedge against the risk of currency devaluation, the Central Bank of Brazil is expected to complete public consultations on a potential ban in February 2025. The ban aims to prohibit the transfer of stablecoins to self-custodial wallets.

Impact Analysis

If the ban is passed, it could limit the ability of Brazilian citizens to use decentralized finance (DeFi) applications and services. This could hinder the adoption of cryptocurrencies in Brazil and strengthen reliance on centralized exchanges. However, the measure could also promote decentralization, as users may turn to peer-to-peer networks for transactions.

Turkey introduces stricter cryptocurrency anti-money laundering regulations

Description

Turkey introduced new cryptocurrency regulations in the last week of 2024, requiring KYC procedures for cryptocurrency transactions exceeding 15,000 Turkish lira (approximately $425).

Impact Analysis

The new regulations aim to strengthen the regulation of cryptocurrency transactions to prevent their use in illegal activities such as money laundering and tax evasion. This may increase compliance costs for exchanges and other cryptocurrency service providers, but it also helps to improve the transparency and trustworthiness of the industry. However, overly strict regulations may also hinder the widespread adoption and innovation of cryptocurrencies in Turkey.

Summary

Policies and Regulations:

The US government is turning to support cryptocurrency, which is expected to improve the regulatory environment and promote industry innovation and growth.
Brazil is considering restricting the transfer of stablecoins to self-custody wallets, which may limit the adoption of DeFi, but could also promote decentralization.
Turkey introduces stricter anti-money laundering regulations, strengthens supervision, enhances transparency, but may also hinder adoption and innovation.

Overall, these policies and regulations reflect the efforts of global regulatory agencies to balance cryptocurrency innovation and risk management. Moderate and prudent regulation will be conducive to the long-term healthy development of the industry.

6. Investment Analysis

6.1. Investment Recommendation

Please note that these suggestions are based on current market analysis and are not financial advice. Investment carries risks, please be cautious when entering the market.

6.2 Investment Strategy

This Week's Top Token Analysis

This week's hot tokens include AI16Z, MEME, BONK, etc. AI16Z, as a super commercial IP in the AI Agent track, adopts the TEE solution behind it, and is expected to play an important role in the AI Agent era. MEME and BONK are community cultural symbols, which have gained funding with their unique cultural connotations and community activity. Overall, the hot tokens this week reflect the influence of the two main themes: AI and Meme.

Summary of Quantitative Strategies

Quantitative strategies performed well this week, especially the contract grid strategy achieved extremely high returns on high-risk and high-return coins. However, it should be noted that the currencies traded by these strategies are highly volatile, and the return-to-risk ratio is extremely high, making them not suitable for investors with low risk appetite.

Summary: This week's market is dominated by two major themes: AI and Meme, and related popular tokens are favored by funds. In terms of quantitative strategies, the high-risk and high-return contract grid strategy dominates, providing an alternative for investors who pursue high returns.

6.3. Financial wealth management products

Simple Earn The remaining currency earns interest, deposits and withdraws, and interest is compounded Total Fund Amount (USDT): 1.111 billion USDT Annualized Yield in the Last 7 Days: 4.36%+8.87%

What is Yu'ebao Gate Yield-Generating Coin (YGC) can help match users with idle assets and borrowing needs. After purchasing YGC, the system will determine whether the loan is successful and the interest rate for that hour based on the user's set lending rate and actual borrowing needs every hour. If the lending rate is set too high and the loan fails or the user redeems the funds before the hourly determination, they will not receive any interest.

How is the income from Yu'E Bao calculated? gate余币宝 supports users to customize the interest rate. Users can set the minimum lending rate when applying for subscription, and the successful lending will be calculated at the determined rate. If the funds are successfully lent at the whole point T, the user can receive interest from T to T+1 hour at T+1. If the funds are redeemed before the determination at T+1, no interest will be received for that hour. The interest generated per hour will be automatically reinvested, and the principal and interest can be redeemed together directly when redeemed.

How to redeem after subscribing to Yu'ebao? Gate Yield supports flexible deposits and withdrawals. It is available 24/7 for subscription and redemption, and the redeemed funds will be credited immediately. Please note that when the loan-to-value ratio reaches 100%, the platform will process redemption requests in order. During this period, interest income can still be earned.

Yu Bibao main wealth management products

Financial Management Treasure The first profit starts here! Low threshold, high security, high yield

**What is Wealth Management? ** The Wealth Management Center is a one-stop comprehensive financial service center established by Gate.io Finance, including current, fixed-term, and all other financial plans, providing users with hundreds of types of digital currency financial products.

What are the investment periods for locked and unlocked financial management? Lock-up wealth management requires a period of lock-up, including regular wealth management, dual currency savings, structured wealth management, and currency wealth management. Non-locking financial management can be participated flexibly, supporting anytime withdrawal, including active currency management and balance treasure.

How to calculate and distribute interest/earnings? Participating in different financial products may have different profit rules. Income will be calculated based on the specified annual interest rate, and the distribution time varies depending on the product.

Main Products

Structured Investment Products New financial products combining fixed income and financial derivatives such as options

What is structured wealth management? Gate.io structured wealth management is a new type of financial product based on a combination of financial derivatives such as fixed income and options. Generally, the price performance of the target during the investment period is compared with the specified linked price to determine the level of return for settlement, which can be divided into two types: principal-protected and aggressive. Users can choose to purchase products with a specified investment period according to their desired rate of return, base currency, etc., and under normal circumstances, the principal and interest will be settled and redeemed at maturity, and early redemption is not possible (depending on the product type).

What are the rules for interest calculation and redemption? The subscription, interest calculation, and redemption rules may vary for different financial products. Taking the Shark Fin product as an example, the final profit calculation will be made at maturity and distributed to the spot account. The annualized yield of the final settlement profit will be determined based on the relationship between the performance of the underlying observed price and the price range during the entire investment period.

What are the risks of structural financial management? According to different product rules, the annualized yield of interest will be determined by comparing the observed price of the underlying asset with the stipulated reference price. When the market fluctuates greatly, it is difficult to grasp the relationship between the two, and there is a possibility of settlement at a lower interest rate. In addition, there is a certain risk of principal loss.

Main Products

4. Market Interest Rate

Concentrate:

TradFi interest rate data is from the Bloomberg terminal.
CeFi and DeFi interest rate range data comes from cryptocurrency media reports such as Cointelegraph and CoinDesk.
Interest rate data is subject to change at any time and the above data is for reference only and does not constitute investment advice.

Disclaimer: All the contents in this report are based on publicly available information, and we strive but cannot guarantee the accuracy and completeness of these contents. The contents of this report do not constitute investment advice. Investors should conduct their own research and make prudent decisions before making investment decisions.

6.4. Technical Analysis

Bollinger Bands Trading Strategy

Bollinger Bands is a commonly used technical indicator that identifies potential overbought or oversold conditions through the standard deviation of prices. It consists of a middle band (20-day moving average), an upper band (middle band + 2 times the standard deviation), and a lower band (middle band - 2 times the standard deviation).

Trading Strategy

When the ETH price approaches or breaks through the upper band, take a selling action with a position of 20%.
When the ETH price approaches or breaks below the lower track, make a buy action with a position of 20%.
The initial stake is 100,000.00 USDT.

Backtest Results

Backtest the historical data of ETH (January 1, 2023 to December 27, 2024) according to the above trading strategy, the results are as follows:

Final Yield: 36.72%
Maximum Drawdown: 21.35%
Annualized Volatility: 48.26%
Total number of transactions: 68 times
Number of profitable trades: 38
Number of losing trades: 30

Data analysis

The strategy performs well when the price of ETH is volatile, allowing for timely profit-taking and low-level position building.
However, due to the lag nature of the Bollinger Bands themselves, the strategy may be slow to react at market turning points.
In addition, the strategy's fixed position management may also lead to excessive exposure in extreme market conditions.

Merit

Simple operation, clear basis.
Capture profit opportunities from price volatility more effectively.

Drawbacks

There is a certain lag, which may miss the trading opportunities of market turning points.
Fixed position management may result in inadequate risk control.

In general, the Bollinger Bands trading strategy is suitable for investors with a high risk appetite and has certain operational advantages in a volatile market. However, at the same time, investors need to have a good sense of risk and make auxiliary judgments in combination with other technical indicators.