Gate Research Institute: Market pullback triggered by narrowing expectations of Fed rate cuts, Hong Kong accelerates virtual asset platform licensing process

Summary

• The Federal Reserve is expected to cut interest rates twice in 2025, which is lower than market expectations, causing a decline in the cryptocurrency market and global stocks.
• Gate.io 24-hour spot trading volume ranks fourth in the world, with an increase of 46.74% compared to the previous day.
• HYPE rose by 40% in the past seven days, leading the DeFi sector.
• The Hong Kong Securities and Futures Commission has issued licenses to four virtual asset trading platforms through a rapid licensing process.
• Clober DEX suffered a contract vulnerability attack, losing approximately 500,000 US dollars.
• Metars Genesis token will unlock a large amount of 10 million next week, investors need to pay close attention.

Market Interpretation

Market Review

• BTC Market - Since BTC broke through $100,000 again on December 12th, the price has shown an upward trend in the first half of this week (December 12th to December 17th) and reached a new high of $108,231. However, the price failed to continue the upward momentum and entered a downward channel, giving back all the gains of the week. From the trading volume perspective, there was a significant increase in volume during the decline, indicating a larger selling pressure in the market. Currently, $99,000 is considered a key support level. [1]

• ETH Quotation —— In the past 7 days, ETH has transitioned from a consolidation phase at a high level to a downward range. In the recent trading day (19th), there was a sharp decline, falling to around $3,661.79. This decline was accompanied by a significant increase in trading volume, indicating heavy selling pressure in the market. There were several short-lived attempts to rebound during the decline, but none of them were able to form a valid reversal.【2】

• Shanzhai Coin - In the past 7 days, the Shanzhai coin market has been greatly affected by the BTC market, and the overall market has fallen on the 19th, offsetting the gains in the first half of this week. The overall market value of cryptocurrencies is 3.668 trillion US dollars. Contract derivatives, AI agent issuance platforms, RWA and other sectors have performed well, with the gains of various tokens exceeding 30%. [3]
• Options Market —— In the options market, December 27th is the most significant turning point, with the number of call and put options reaching approximately 85,000 and 60,000 respectively, with a nominal amount also peaking at around 15 billion. Overall, the market shows a dominance of bullish sentiment, as the amount of call options held is always higher than that of put options. Although there were significant fluctuations in options expiring on January 25th, 31st, and March 28th in the year 25, the scale was smaller than that of December 27th in the year 24. Before the 27th, the market tended to be stable, with a relatively small options delivery volume, indicating that market participants were adopting a relatively cautious wait-and-see attitude as Christmas approached.【4】

• Macro Data —— On December 19, the Federal Reserve decided to cut the benchmark interest rate by 25 basis points to a range of 4.25%-4.50%, marking the third consecutive rate cut. This indicates that the Federal Reserve is gradually easing monetary policy, in line with market expectations. Powell’s remarks suggest that the Fed will be more cautious in adjusting interest rates under the no longer tightening policy, and the Fed is at or near the moment of slowing rate cuts. The dollar’s appreciation and the decline of Bitcoin reflect the market’s sensitivity to this decision, especially investors adjusting their expectations for risk assets.
• Stablecoin —— The overall market value of stablecoins has increased by 1.26% to $204.2 billion, and more off-market incremental funds have flowed in. 【6】
• Gas Fee —— The average Gas Fee of Ethereum in the past 7 days is 14.3 Gwei, a decrease of 21% from last week, with a total of 10,994.13 ETH destroyed, and the network activity weakened. Uniswap is the protocol that consumed the most ETH this week, with a total consumption of 1,143 ETH【7】

Hot Concepts

This week, the price of Bitcoin fluctuated widely in the range of $99,000 to $108,000, and the performance of various altcoin sectors varied. According to Coingecko data, the three sectors of **contract derivatives, AI agent coin issuance platform, RWA ** achieved significant breakthroughs this week, with increases of approximately 27.2%, 19%, and 15.9% respectively in the past seven days.【8】

Derivatives Contracts (Perpetuals) - Derivatives contracts are a type of financial instrument commonly used in trading scenarios, providing investors with specific trading opportunities and strategic choices. Influenced by factors such as overall market activity and trading advantages, this sector has shown a significant increase in the past seven days, with the overall sector rising by more than 27.2% as of 12:00 on December 19 (UTC+8).

Among them, BLUE rose by 77.9% in 7 days. $BLUE is the utility token of Bluefin, a decentralized spot and derivatives trading platform based on the Sui blockchain. This rise is attributed to the recent disclosure of important data by Bluefin: the platform’s cumulative trading volume has exceeded $40 billion, with a total deposit amount of over $55 million, and the number of unique deposit users has exceeded 100,000. Currently, Bluefin supports most of the trading activities on the Sui network. [9]

AI Agent Coin Platform (Top AI Agent Launchpad) - AI Agent Launchpad is a category of decentralized platforms dedicated to artificial intelligence, aiming to provide users with tools and resources for the rapid deployment and launch of AI tokens (AI Agents). In the past seven days, this sector has seen a 19% increase. Currently, such tokens are gradually receiving market attention and becoming a new trend in the integration of AI and blockchain.

The 7-day gains of EthernalAI (EAI), Solaris AI (SOLARIS), and Vrituals Protocol (VIRTUAL) are 47%, 112.6%, and 38.5% respectively. [10]

RWA - RWA refers to the tokenization of real-world assets (such as real estate, bonds, stocks, commodities, etc.) through blockchain technology, making them circulate on the chain. RWA has become an important direction for the integration of DeFi and traditional finance, with tremendous market potential. Converting traditional illiquid assets into tradable tokens improves market efficiency, and leveraging the transparency and smart contracts of blockchain reduces intermediary costs and enhances transaction security. Attracting market attention, this sector has risen by 15.9%.

Among them, ANZ has risen by 206% in the past 7 days. The TVL of this project has surpassed $86 million, and the APR of the ANZ/WETH trading pair on Aerodrome has reached 99%. The growth in token demand is driving the increase in its token price. [11]

Hot Coins

According to CoinGecko data, the following popular currencies in the past 7 days are as follows: [12]

HYPE - The seven-day increase is about 40.0%, and the circulating market value is $8.186 billion. Hyperliquid is a high-performance blockchain platform that focuses on providing low-latency trading experience. Its decentralized exchange has become one of the largest in the world, with stable liquidity and an active user base. The platform combines the ideals of decentralized finance (DeFi) and offers a seamless trading experience comparable to centralized exchanges (CEX), driving the development of the entire chain’s finance.

As a new emerging protocol, Hyperliquid has been developing rapidly recently. Its Total Value Locked (TVL) has surged by $1.87 billion in the past 7 days, reaching $44.01 billion, surpassing Base Network ($40.62 billion), currently ranking sixth, and achieving a daily growth of 28.93%, showing a very impressive performance, driving its token price growth[13].

VIRTUAL —— **The seven-day increase is about 37.3%, with a market capitalization of $25.98 billion. Virtuals Protocol is an artificial intelligence protocol that creates various AI characters (that respond via text, voice, and actions) for different virtual worlds (such as games or online spaces). Virtual Protocol provides decentralized creation and monetization incentives for AI characters in every virtual interaction (game, metaverse, online interaction, or otherwise).

$VIRTUAL confirms the official launch of the Hyperliquid trading platform, a decision made in response to community demand. Users can now engage in long and short trading of $VIRTUAL with up to 5x leverage on Hyperliquid’s high-performance Layer 1 blockchain. This news has driven an increase in its token price. [14]

**ENA ** —— The seven-day increase is about 5.4%, and the circulating market value is 33.73 billion US dollars. Ethena (ENA) is a synthetic dollar protocol based on Ethereum. It creates the first native cryptocurrency solution that does not rely on traditional banking system infrastructure, using perpetual contracts and the funding and basis returns of the futures market.

The financial services company World Liberty Financial (WLF) supported by Trump has reached a strategic cooperation with the decentralized financial platform Ethena, and plans to implement sUSDe (a synthetic stablecoin pegged to the US dollar) on the Ethena network in the first phase. This cooperation is considered a major advancement in the DeFi field and has already begun to have a positive impact on the price of Ethena’s native token ENA. [15]

This Week Focus

Hotspot Review

The Federal Reserve cut interest rates by 25 basis points, with risks to employment and inflation targets roughly balanced. The Federal Reserve cut its federal funds rate target range by 25 basis points to 4.25%-4.5% as scheduled, stating that future policy adjustments will depend on the latest data and risk assessment. According to the latest dot plot, it is expected that interest rates will be cut twice in 2025, which is a decrease from the previous forecast of four times, indicating that the Fed may slow down the pace of interest rate cuts. This change reflects its cautious optimism about the economic growth outlook and also demonstrates confidence in achieving inflation and employment targets. The time for achieving the inflation target has been delayed from 2026 to 2027, indicating a higher tolerance for the duration of inflation pressures. In terms of the labor market, although conditions have eased slightly and the unemployment rate has risen by 0.5% since the beginning of the year, it is still at a low level. The Fed believes that a moderately accommodative policy is still necessary to stabilize employment.

The Fed has raised its expectations for US economic growth, forecasting a 2.5% increase in 2024 and a 2.1% increase in 2025, both higher than the September forecast. Goldman Sachs expects the Fed to cut interest rates three times next year, bringing the federal funds rate down to 3.65%, but may skip a rate cut in January. Wells Fargo Bank, on the other hand, believes that the pace of rate cuts will slow, with three expected next year, while emphasizing that future policy adjustments will be more cautious. Deutsche Bank, on the other hand, believes that the Fed may fully pause rate adjustments in 2025 to observe inflation developments. These forecasts indicate that despite the path of rate cuts already emerging, different institutions still have divergent assessments of the Fed’s policy pace, showing complex expectations for inflation and economic growth.

The Securities and Futures Commission of Hong Kong has issued licenses to four virtual asset trading platforms through a rapid licensing process. The licensing actions of the Hong Kong Securities and Futures Commission highlight its more clear and proactive stance in the regulation of virtual assets. By establishing specific regulatory frameworks, Hong Kong provides legitimacy and standardization for virtual asset trading platforms, which helps improve industry transparency and credibility. With more platforms approved for operation, technological innovation will further accelerate, and the market will continue to make progress. The Securities and Futures Commission balances the needs of investor protection and ecosystem development through the licensing process, while strengthening risk management for platforms, such as vulnerability assessments and penetration testing, to enhance security and compliance.

In the future, with further clarification of regulations, the application scope of blockchain technology will expand from the financial sector to multiple industries such as supply chain management, digital identity authentication, etc., promoting diversified development. Through improved regulation and infrastructure construction, Hong Kong is laying an important foundation for the widespread application of blockchain technology. The change from cautious and even conservative attitudes in the past to the current adoption of clear and proactive regulatory positions reflects Hong Kong’s strategic adjustment to adapt to the global virtual asset market development.

Deutsche Bank is building a Layer 2 blockchain on the Ethereum ecosystem Deutsche Bank is developing a second-layer (L2) blockchain based on ZKsync technology on Ethereum, aiming to address the compliance challenges of public blockchains in regulated financial environments. This project, named ‘Project Dama 2’, is part of the ‘Project Guardian’ led by the Monetary Authority of Singapore, which brings together 24 international financial institutions to explore the potential of blockchain in asset tokenization. Deutsche Bank’s L2 solution enhances transaction efficiency, compliance, and security by integrating trusted validators and granting regulatory authorities special supervisory powers. If successful, this project could serve as a model for other financial institutions adopting blockchain technology, particularly in the integration of asset services and decentralized networks.

According to the plan, the platform’s Minimum Viable Product (MVP) is expected to be launched in 2025, but it still needs to go through key regulatory approval processes. L2 blockchain finds a balance between transparency and financial compliance by providing faster and lower-cost transactions and regulatory tools such as “super admin permissions”. This move demonstrates that Deutsche Bank is pushing for further application of blockchain technology in a regulated environment, injecting new possibilities for industry innovation and providing a new direction for the integration of blockchain technology in traditional finance.

Security Incident

Clober DEX suffered a contract vulnerability attack, resulting in a loss of approximately 500,000 US dollars Clober DEX lost $500,000 due to a hacker attack, once again warning of the potential security risks in the DeFi field. The attack exploited a vulnerability in the incomplete update of smart contract state, as the attacker maliciously triggered callbacks through a token contract, successfully withdrawing 133 Ethereum from the liquidity pool. This incident was not a problem with the initial contract design, but rather an introduction of unreviewed code changes, highlighting the importance of code change review. Although the core protocol was not affected, the liquidity pool vulnerability severely damaged Clober’s reputation.

In response, Clober offers a 20% bounty to encourage hackers to return the funds, while promising to strengthen audits and security measures. However, this incident is not just a technical vulnerability, but also reflects the systemic issue of DeFi projects neglecting security in pursuit of rapid deployment. Ultimately, Clober’s lesson serves as a reminder to all projects that security is not a one-time task, but a long-term commitment that requires continuous attention.

Project Focus

Sonic Labs announces that its mainnet has officially launched Layer1 blockchain project Sonic Labs (formerly Fantom) announced that its mainnet has been officially launched. It is a high-throughput, EVM-compatible Layer1 blockchain platform that provides incentives and infrastructure for developers. Sonic can process up to 10,000 transactions per second, with sub-second finality and a native decentralized gateway to Ethereum. FTM holders can now use the upgrade portal to upgrade their tokens to S on Sonic at a 1:1 ratio and unlock access to various applications on Sonic.

Highlighted Data

Gate.io ranked fourth in the world in 24-hour spot trading volume Gate.io ranks fourth in the 24-hour spot trading volume of global centralized exchanges, with a trading volume of up to 82.74 billion US dollars, an increase of 46.74% compared to the previous day. This performance highlights Gate.io’s strong competitiveness in the global cryptocurrency market. As a leading global trading platform, Gate.io has attracted a large number of users’ participation and improved market liquidity with its rich trading pairs, diversified market services, and strict security guarantees.

The significant increase in transaction volume not only reflects the improvement of market activity, but also demonstrates the high trust of users in Gate.io’s technical stability and service transparency. This performance also reflects the overall increase in activity in the cryptocurrency market in recent times, especially against the backdrop of intensified trading of hot assets and market volatility. As a pioneer in the industry to launch innovative zones, this data reflects the effectiveness of Gate.io’s technological innovation, user experience optimization, and continuous investment in innovation in emerging markets. [21]

Riot Platforms increased its BTC holdings by 667 coins, bringing the total position to $1.8 billion The U.S. Bitcoin mining company Riot Platforms announced the use of the recently issued $594 million convertible bonds with a low interest rate of only 0.75% to purchase 667 bitcoins at an average price of $101,135 per bitcoin, with a total investment of approximately $67.457 million. This acquisition increased its total bitcoin holdings to 17,429, with a total market value of approximately $1.8 billion at current market prices.

Through acquisitions and mining activities, Riot achieved a quarterly return of 36.7% per bitcoin and a year-to-date return of 37.2%. Recently, American bitcoin mining companies have continued to increase their holdings of bitcoin through financing, highlighting these companies’ strong confidence in the long-term value of crypto assets and their strategic layout. This trend not only consolidates the key position of mining companies in the bitcoin ecosystem, but also indicates that the attractiveness of cryptocurrencies as an asset class is continuously strengthening. Riot’s actions demonstrate the industry-leading companies’ keen judgment of market cycles and their proactive investment in long-term development. [22]

As of this year, MicroStrategy’s financial operations have brought shareholders approximately $14.6 billion in net earnings MicroStrategy co-founder and CEO Michael Saylor posted on the X platform that as of now, the company has achieved a return on investment of 72.4% through Bitcoin-related financial operations, creating a net profit of approximately 136,965 bitcoins worth about $14.66 billion for shareholders (calculated at $107,000 per bitcoin).

This achievement demonstrates the success of MicroStrategy’s strategy of Bitcoin as a core asset and highlights the strong potential of Bitcoin as an investment tool. This high return not only brings considerable value to the company and shareholders, but also consolidates MicroStrategy’s leadership position in the Bitcoin ecosystem. Saylor’s statement further validates the investment attractiveness of Bitcoin as a strategic asset and sets a benchmark for traditional financial institutions in the management of cryptographic assets. This impressive performance demonstrates the highly demonstrative forward-looking layout of MicroStrategy in the field of digital asset management and provides confidence and inspiration for more companies to explore the cryptocurrency market. [23]

Market Opportunities

Airdrop

The airdrop project to pay attention to this week is: GoPlus

Goplus is committed to addressing these challenges by building a comprehensive decentralized user security network. With its innovative architecture and a range of products, Goplus ensures that users can use blockchain technology with peace of mind and security. Goplus offers a range of products designed to enhance blockchain security. These products include SecWareX, Security API, Security SDK, and SecNet. Goplus empowers the community by enhancing transparency, inclusivity, and collaboration. The security detection API is integrated by many leading dAPPs in the Web3, with a daily call volume of up to 21 million; its user personal security platform SecWareX gained 1.8 million independent IP users within 2 months of its launch. In June 2024, Goplus successfully raised $10 million to drive the development of its Web3 security solutions.

Participation Method

1. Log in to the website,
2. Connect your personal wallet to Ethereum or Solana
3. The web interface completes urgent security tasks and daily tasks.

Note: The airdrop plan and participation method may be updated at any time. It is recommended that users follow Goplus’s official channels to obtain the latest information. At the same time, users should participate cautiously, pay attention to risks, and conduct sufficient research before participating. Gate.io does not guarantee subsequent airdrop rewards distribution.

Financing Weekly Report

Several projects successfully completed financing this week, involving a wide range of applications in infrastructure, DeFi, games, and other fields. According to RootData statistics, between December 14th and December 20th, a total of 17 projects announced financing, totaling $137.5 million[25].

The following are the top three financing scales:

BVNK completed a Series B financing of $50 million on December 17, led by Haun Ventures, a large fund focusing on cryptocurrencies. Coinbase Ventures and existing investor Tiger Global also participated in this round of financing. The Series B valuation of the project is $7.5 billion. BVNK provides banking services and payments for crypto-native companies. Companies using BVNK can accept payments in fiat currency and cryptocurrencies, hold hundreds of different currencies and crypto assets, and send funds worldwide.

Lens Protocol successfully completed a $31 million financing on December 18th. The leading investors include Faction and IDEO CoLab Ventures, and other participants include Foresight Ventures and other companies. Lens Protocol is a decentralized, open social graph that any application can plug into. It aims to enable creators to have their own links with their communities, forming a fully composable, user-owned social graph. The protocol is built from scratch with modularity in mind, allowing for the addition of new features and fixes while ensuring the immutability of user-owned content and social relationships.

Plume Network announced on December 18th that it has completed a $20 million Series A financing, led by Haun Ventures. Plume is a fully integrated modular chain focused on RWAfi. The project has built the first modular and composable EVM-compatible chain with a focus on RWA, aiming to simplify the onboarding of all types of assets and streamline capital onboarding through native infrastructure and a unified RWAfi-specific functionality. Plume is building a composable DeFi ecosystem around RWAfis, which features an integrated end-to-end tokenization engine and a network of financial infrastructure partners for plug-and-play integration by builders.

Focus on next week

tokens unlocked

According to Token Unlocks data, several important token unlocking events will take place in the market next week (2024.12.21-12.27). The total unlocking value exceeds 127 million US dollars. [26]

The situation before unlocking next week is as follows:

MRS plans to unlock about 10 million tokens at 12:00 AM UTC+0 on the 23rd, accounting for approximately 11.87% of its circulating supply, worth about $50.2 million. The daily trading volume of MRS fluctuates significantly, and the recent trading volume is significantly lower than the unlocking amount this time, which may cause price fluctuations of MRS tokens. Investors holding MRS tokens need to pay close attention.

IMX plans to unlock approximately 24.52 million tokens at 12:00 AM UTC+0 on the 27th, accounting for 1.45% of its circulating supply, worth about 36.78 million US dollars. The recent daily trading volume of IMX is around 100 million US dollars, and this unlocking is relatively minor in terms of its impact on token price.

ADA plans to unlock approximately 18.53 million tokens at 12:00 AM UTC+0 on the 21st, accounting for 0.05% of its circulating supply, with a value of approximately $17.18 million. The recent average daily trading volume of ADA is around $1 billion, and this unlocking will have minimal impact on the token price.

Cryptocurrency Calendar

Next week (2024.12.21-12.27) will usher in a series of important events, which will have a profound impact on the cryptocurrency market, the global economy, and the energy market【27】. The Avalanche Ambassador DAO will be held on December 21, 2024, at InnoSpace in Yangpu District. Participants will have the opportunity to gain in-depth understanding of Avalanche and its pioneering development, and those who register for the event will have the chance to receive AVAX airdrops【28】. On December 23, the US Conference Board will release the latest Consumer Confidence Index【29】. This index is an important indicator that measures the confidence of US consumers in the current economic situation and future economic prospects. The index is based on surveys of thousands of American households, collecting consumers’ opinions on the job market, income levels, price levels, etc., reflecting consumers’ willingness to spend on future consumption. When the index is high, consumers are more likely to increase their spending, thereby driving economic growth.

**Reference materials**

1. Gate.io,
2. Gate.io,
3. Cryptoquant,
4. Coinglass,
5. Federal,
6. Defillama,
7. Etherscan,
8. Coingecko,
9. X,
10. CoinGecko, /ai-agent-launchpad
11. X,
12. CoinGecko,
13. DefiLlama,
14. X,
15. X,
16. TheBlock，
17. SFC,
18. Cointelegraph,
19. X,
20. Sonic Labs，
21. Coingecko, en/exchanges
22. RiotPlatform,
23. X,
24. Goplus Network,
25. Rootdata,
26. Tokenomist,
27. Gate.io,
28. PANews,
29. Jin10,

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