Foresight Ventures: Institutions are fully entering the market, and the meme season is about to arrive

Written by: Mike

A. Market Viewpoint

1. Macroeconomic Liquidity

Monetary liquidity has improved. The U.S. core PCE for the fourth quarter was revised up to 2.1%, exceeding expectations and highlighting ongoing inflationary pressures. Investor expectations for the Federal Reserve's rate cuts continue to weaken, with a belief that only 75 basis points will be cut in 2024. U.S. stocks continue to strengthen, with earnings reports from tech companies led by Nvidia further supporting the upward trend, showing no signs of a severe correction. The cryptocurrency market has surged, with significant inflows into U.S. spot ETFs over several days.

2. Overall Market Trends

Top 100 market cap gainers:

This week, BTC surged close to its historical high, initiating a rally. BTC's dominance rose to a near historical high of 55%, with only 30% of altcoins outperforming BTC. Market hotspots are mainly concentrated in AI and meme coins, with institutions speculating on AI and retail investors speculating on meme coins.

1. PEPE: The meme aligns with the interests of major exchanges, helping to attract new users. In the last meme cycle, the overall market cap accounted for 5%; if this cycle conservatively sets it at 2%, it could reach at least $120 billion. DOGE and SHIB are in a defensive position, and PEPE, which has recently been listed on major exchanges, shows significant potential.

2. AR: Originally a leader in the permanent storage sector, it has transformed into an L1 public chain that aims to compete with ETH. Recently launched the public testnet Arweave AO, designed to provide a computing layer for AI.

3. COTI: Originally a payment project from 2017, the team is based in Israel. It has recently pivoted to become a privacy-focused L2 for ETH, boasting full homomorphic encryption technology, claiming to be far superior to Fhenix, which is backed by Multicoin Capital. With a market cap of several hundred million dollars, it offers a higher risk-reward ratio compared to ZK L2s, which often have market caps in the hundreds of billions.

3. BTC Market Trends

1) On-chain Data

New spot ETF products have created a new source of demand for BTC. Over 90,000 BTC have net flowed into ETFs, amounting to $6 billion and bringing the total ETF size to $40 billion.

The market cap of stablecoins has increased by 2% month-on-month, continuing its upward trend.

The long-term trend indicator MVRV-ZScore, based on the total market cost, reflects the overall profitability of the market. When the indicator is above 6, it indicates a top range; when below 2, it indicates a bottom range. MVRV has dropped below the critical level of 1, indicating that holders are generally at a loss. The current indicator is 2.67, entering a middle stage.

Institutional crypto investment products have seen net inflows for four consecutive weeks, surpassing $6 billion year-to-date.

2) Futures Market

Futures funding rates: This week, rates surged rapidly to a one-year high, indicating a FOMO market sentiment. Rates of 0.05-0.1% indicate a high level of long leverage, suggesting a short-term market top; rates of -0.1-0% indicate a high level of short leverage, suggesting a short-term market bottom.

Futures open interest: This week, BTC open interest surged, with both volume and price rising.

Futures long-short ratio: 1.1, indicating normal market sentiment. Retail sentiment often acts as a contrarian indicator; below 0.7 indicates panic, while above 2.0 indicates greed. The long-short ratio data is highly volatile, reducing its reference significance.

3) Spot Market

BTC surged close to the previous high of 69,000, marking six consecutive monthly gains. Continuous inflows from spot ETFs have led many mainstream U.S. institutions to passively engage in strategic allocations. In the short term, only altcoins with AI and meme narratives can outperform BTC, while 70% of other altcoins are generally underperforming.

B. Market Data

1. Total Locked Value in Public Chains

2. TVL Proportions of Various Public Chains

This week, the total TVL reached $92.5 billion, an increase of $17.8 billion, representing a growth rate of 23.8%. BTC has surged past the $60,000 mark, approaching its historical high. This month, the TVL of all major public chains has significantly increased, with all major public chains rising this week. The ETH chain rose by 4%, the TRON and ARB chains rose by around 9%, while the BSC and SOLANA chains both rose by 15%. The BTC chain skyrocketed by 38%. The ETH chain has surged nearly 60% over the past month, with a total TVL of $52.6 billion, five times that of the second place.

3. Locked Value of Various Chain Protocols

1) ETH Locked Value

2) BSC Locked Value

3) Polygon Locked Value

4) Arbitrum Locked Value

5) Optimism Locked Value

6) Base Locked Value

7) Solana Locked Value

4. Changes in NFT Market Data

1) NFT-500 Index

2) NFT Market Situation

3) NFT Trading Market Share

4) NFT Buyer Analysis

This week, the NFT market saw a slight decline, with the floor prices of blue-chip projects fluctuating. Pandora rose by 1.5%, BAYC rose by 1.8%, MAYC fell by less than 1%, Milady rose by 13%, and Azuki fell by 5.4%. The trading volume in the NFT market saw a slight increase compared to last week, with Pandora maintaining a leading position. Notably, the cumulative number of first-time NFT buyers has surpassed a three-month high, although the overall NFT market remains sluggish.

5. Latest Financing Situation of Projects

6. Post-Investment Dynamics

1) ORA --- Verifiable Oracle Protocol

ORA (formerly Hyper Oracle) has released an on-chain Optimistic privacy AI solution "opp/ai". The official statement indicates that opp/ai combines zkML (Zero Knowledge Machine Learning) and opML (Optimistic Machine Learning), possessing the privacy and performance of both. In tests, opp/ai can enhance zkML's performance by 2-5 times while retaining its privacy and decentralization features. Additionally, opp/ai has the capability to integrate any zkML solution, meaning that improvements and optimizations in zkML solutions will directly impact opp/ai.

2) EthStorage --- Infrastructure

EthStorage has integrated with the modular data availability network Celestia, providing a complete long-term data availability (DA) solution for Ethereum L2/L3. Celestia's Blobstream bridges Celestia's modular DA layer to Ethereum, while EthStorage, supported by its original time-sampling data availability proof algorithm, will serve as a permanent data storage solution for DA BLOBs. Together, Celestia and EthStorage have created a high-throughput, programmable dynamic storage interface for Rollups. This functionality not only provides long-term DA solutions for Rollups but also supports new full-chain applications, including full-chain games, decentralized social networks, and on-chain AI applications.

3) Merlin --- BTC L2

This month, Merlin Chain achieved a total TVL of $1.97 billion within 14 days of launching its staking activities, surpassing the $1.5 billion of Blast, which launched in November last year. On the 26th of this month, the total value of NFTs within the Merlin Chain ecosystem exceeded $420 million, making it the highest-valued public chain project for NFTs outside of Ethereum. On February 5th, Merlin Chain announced the completion of financing, with 24 institutions including OKX Ventures, ABCDE, Foresight Ventures, and Arkstream Capital participating.