gate Research Institute: The EU MiCA regulation is about to take effect, gate Quantitative Fund's annualized return reaches 38%, refreshing industry record

Abstract

• This week, BTC fluctuated between $99,000 and $92,600, and challenged the resistance multiple times, attempting to break through upwards.
• ETH this week’s market presents a rising triangle convergence pattern, with clear resistance near $3,540.
• Gate.io Quantitative Fund has an annualized return of up to 38%, setting a new industry record.
• Runes’ transaction share on the Bitcoin network has dropped to a new low.
• SUI, OP, ZETA and other public chain tokens will be unlocked in large quantities next week. Investors need to pay close attention.
• The EU Cryptocurrency Regulation ‘MiCA’ came into effect on December 30th.

Market Analysis

Market Review

• **BTC Market - **Since Bitcoin’s price fell from its all-time high of 108,314.7 last week, the market sentiment has become cautious, presenting a typical range-bound pattern this week with overall consolidation of volatility. The current resistance is around 99,000, showing strong selling pressure at this level as the bulls have attempted to break through multiple times without success; the support is at 92,600, where the bulls have shown resilience, indicating limited downside potential in the short term. If the price can successfully break through the resistance and hold steady, it will boost market confidence and may trigger a strong upward trend; however, if it falls below the support, the bearish momentum may further pressure, driving the price down to a lower range. The current market is in a delicate stage of watching and tug-of-war, and investors need to closely monitor the direction of the next breakthrough.【1】

• ETH Market Review — After the price of Ethereum fell from last week’s historical high point of 4,105.47, this week’s trend has entered a rising triangle convergence pattern. The market sentiment is cautiously optimistic, and the price is steadily advancing with support from the upward trend line. The resistance level is concentrated around 3,540, which has become a key threshold for short-term bullish challenges. If it can successfully break through the resistance level and stabilize, the market may usher in a new wave of upward momentum, and the price is expected to challenge higher ranges. On the contrary, if the upward trend line is effectively broken, the expected price will return to a consolidation pattern, and the long and short forces will once again be in a game of contention. [2]

• Shanzhai Coin - In the past 7 days, Shanzhai Coin has experienced a relatively large decline around December 20. However, the performance is relatively differentiated. The weaker Shanzhai coins have fallen to the level of the US presidential election on November 11. On the other hand, the stronger Shanzhai coins have undergone a normal pullback and have experienced a significant rebound recently. Sectors such as Virtuals Protocol ecosystem, Pump.fun ecosystem, and AI Agent Launchpad have shown relatively strong growth, with many related concept tokens experiencing significant increases, and some even doubling in value.【3】
• Futures Market —— In the options market, the market experienced a washout last week, and the spot prices remained in a lateral fluctuation. This Friday will see the expiration of nearly 20 billion US dollars of Bitcoin and Ethereum options, which may trigger end-of-quarter volatility selling, especially when the spot prices are in a sideways trend and sellers continue to roll over short positions. If BTC breaks through $100,000, the volatility may remain stable, and altcoins may have a chance to catch up. Although the European and American markets are closed for the Christmas holiday, the crypto market has seen a clear rise driven by Bitcoin. Due to poor market liquidity during the Christmas holiday and year-end settlement period, the price fluctuations require less momentum. In terms of options, the short-term implied volatility (IV) has decreased compared to the previous day, and market makers’ repositioning is nearing completion, with IV expected to remain stable before the year-end. Currently, the key pain points for Bitcoin options are at $84,000 and for Ethereum at $3,000, and these annual key pain points may be ineffective as in previous years.【4】
• **Macro Data - ** On the evening of December 20th, the PCE and core PCE data released by the United States were all lower than expected, easing some investors’ concerns about the reduction in the number of rate cuts next year. A report from the US Department of Commerce shows that the PCE, the inflation indicator favored by the Federal Reserve, rose by 2.4% year-on-year in November, while economists had expected 2.5%. Estimates based on the Consumer Price Index and other data indicate that the PCE price index for the 12 months ending in November unexpectedly cooled across the board, leading to a selloff of the US dollar and a rebound in US stocks, gold, and the cryptocurrency market as a result. [5]
• Stablecoin - In the past 7 days, the overall market capitalization of stablecoins has increased by 0.29% to $204.786 billion. The short-term growth rate has slowed down, and the demand during the recent holidays has decreased, which is in line with the recent market trend.【6】
• **Gas Fee —— **The average Gas Fee on Ethereum in the past 7 days has dropped to 4.58 Gwei, a significant decrease compared to last week. Network activity has weakened, possibly influenced by the OpenSea Foundation’s hint at the upcoming launch of a new cryptocurrency. Previously, the average Gas Fee on the Ethereum network had risen to 54.3 gwei.【7】

Hot Concepts

This week, the price of Bitcoin first fell and then rose, fluctuating between approximately $92,300 and $102,773.5. The performance of various altcoin sectors was mixed. According to Coingecko data, the top three sectors with the highest growth in contract derivatives this week were the Virtuals Protocol ecosystem, the Pump.fun ecosystem, and the AI Agent Launchpad, with increases of approximately 37.7%, 22%, and 21.8% respectively in the past seven days. [8]

Virtuals Protocol Ecosystem - Virtuals Protocol is a decentralized platform that provides a new economic model for creators and users in the virtual world through blockchain technology and tokenization. It allows virtual assets to become investable, tradable, and have long-term value as digital products. Influenced by factors such as overall market activity and its own trading advantages, this sector has experienced significant growth in the past seven days. As of December 26, 00:00 (UTC+0), the sector has risen by over 31.8% in the past seven days. Among them, the currencies in the sector: DORA has risen by 1000.2% in the past seven days, and GAME has risen by 177.8% in the past seven days. [9]

Pump.fun Ecosystem - The Pump.fun Ecosystem is an innovative platform designed for Memecoin creators and traders, simplifying the token creation and trading process. Users only need to pay a fee of 0.02 SOL, enter the token name, and upload an image to easily launch a new token. Other users can buy and sell these tokens on the pricing curve, creating a fair and decentralized market. When the token market cap reaches $69k, the platform will automatically inject liquidity into Raydium and burn tokens to ensure security and liquidity. Additionally, creators who complete the binding curve will receive a reward of 0.5 SOL.

Among them, the currencies within the sector are as follows: JOI has risen by 3,247.5% in the past 7 days, TRISIG has risen by 473.2% in the past 7 days, and BGG1 has risen by 173.1% in the past 7 days. [10]

AI Agent Launchpad - AI Agent is a system that is driven by a large language model as its brain, with the ability to understand, perceive, plan, remember, and use tools independently, and is capable of automating the completion of complex tasks. AI Agent is different from traditional artificial intelligence, as it has the ability to progressively achieve given goals through independent thinking and calling tools.

Among them, the currencies in the section: PAAL, VIRTUAL, and AI9000 have increased by 36.1%, 33.6%, and 32.3% respectively in the past 7 days.【11】

Hot cryptocurrencies **

According to CoinGecko data, the top coins in the past 7 days are as follows: [12]

MOVE —— 7-day increase of about 84.6%, with a market capitalization of 26.98 billion US dollars. Movement Network is a blockchain ecosystem based on modular Move, enabling developers to build secure, high-performance, and interoperable blockchain applications, bridging the gap between the MoveVM and EVM ecosystems.

Recently, there may be a rise in response to positive official news. The Movement Network Foundation has announced the launch of an ecosystem funding plan, with funding and proposal solicitation now open. The aim is to help builders, developers, and creators advance decentralized applications and infrastructure in the Movement ecosystem. Funds will focus on encouraging innovative use cases, public goods, and tools for applications based on MoveVM, and regular RFM updates will be released for specific projects or tools for ecosystem development.

**VIRTUAL —— Seven-day increase of about 28.9%, with a market capitalization of $32.18 billion. Virtuals Protocol is an artificial intelligence protocol that creates various artificial intelligence characters (which can react through text, voice, and actions) for different virtual worlds (such as games or online spaces). Virtual Protocol provides decentralization and monetization incentives for artificial intelligence characters in every virtual interaction (game, metaverse, online interaction, or others).

VIRTUAL may have risen due to the positive impact of the latest news from Questflow announcing a deep collaboration with Virtuals, a leading decentralized application platform, to jointly build the Base Agents ecosystem. [14]

HBAR - The seven-day increase is about 18.9%, with a circulating market value of 119.5 billion US dollars. Hedera is a public ledger network that uses a hash graph consensus form, which is fast (>10,000+TPS), secure (ABFT), and fair (the timing of all transactions is publicly transparent, and hiding transaction records is not allowed). The HBAR coin has multiple functions: 1. The hash graph algorithm uses proof of stake model to prevent Sybil attacks, where nodes vote for consensus based on the value of HBAR coins in their wallets, making HBAR crucial for network security; 2. Rewarding nodes for achieving consensus, such as paying for API calls and assisting with micro-payments; 3. HBAR coins allow people to use Hedera API and other services built on it.

HBAR may see a significant increase in the near future due to the positive impact of the expected HBAR ETF next year as predicted by Bloomberg analysis. In addition, HBAR is also one of the high market value strong currencies in the fourth quarter of this year. [15]

Focus of the Week

Hotspot Review

NERC Report: Cryptocurrency mining and AI data centers are driving North American electricity demand to new highs The rapid development of cryptocurrency mining and AI data centers is driving North America’s electricity demand to new highs, according to the latest report from the North American Electric Reliability Corporation (NERC). For example, in Texas, it is expected that the annual growth rate of peak summer electricity demand will reach 4.6% by 2029, four times the previous forecast. NERC pointed out that the power consumption of cryptocurrency mining will fluctuate with market prices, while AI data centers require continuous cooling and energy storage, which poses challenges to power grid management.

To address this trend, Texas has implemented energy response plans and strengthened distributed energy management through the HB 3390 bill. Some mining companies, such as MARA, are also turning to renewable energy. With the rapid development of cryptocurrency mining and AI data centers, North America faces unprecedented energy demand pressures. The intensification of grid loads may lead to energy shortages and risks of unstable power supply. [16]

Robinhood CEO: Stocks and other traditional financial assets may ultimately move to the chain like cryptocurrencies Vlad Tenev, CEO of Robinhood, a US online brokerage, predicts that stocks and other traditional financial (TradFi) assets will eventually be transferred on-chain like cryptocurrencies, and the efficiency gained through blockchain technology will make it inevitable for them to be adopted by traditional finance. He also predicts that US President-elect Donald Trump and his administration will formulate policies to accelerate the transfer of stocks, private companies, and real-world assets (RWA) to the chain through tokenization.

Tenev believes that on-chain transactions are the logical next step in the evolution of TradFi processes as they can simplify the process. According to RWA.xyz data, stock tokenization asset issuers include Backed Assets, Dinari, Swarm X, etc., with a total size of stock tokens of only $12.24 million, a YoY increase of over 110% from the same period in 2023. The continuous growth of stock tokenization assets has also made more and more influential figures in the industry optimistic about this field. [17][18]

BIO Protocol community initiates proposal to cross-chain BIO to Solana network The DeSci protocol BIO Protocol community initiated the proposal to “cross BIO to Solana”, aiming to expand its influence by deploying the BIO token on the Solana blockchain. This will allow the protocol to establish a liquidity pool to enhance the accessibility of BIO tokens and other tokens in the BIO ecosystem, and also lay the foundation for deploying the BIO Protocol on the Solana chain.

If the proposal is passed, the BIO community will accept the following actions of the BIO association: First, establish a cross-chain bridge infrastructure to achieve seamless token transfer on / off the Solana blockchain. Second, bridge the BIO token by deploying the BIO token program on Solana. Third, grant the BIO association the authority to allocate an additional 1% from the ecosystem incentive to the market liquidity fund for deployment of liquidity pools on Solana and potential other chains. This proposal reflects Solana’s influence in the crypto industry as a high-performance public chain. At the same time, with Solana’s fast transaction speed and low transaction fees, BIO will attract more users to participate, thereby increasing its trading volume and liquidity. [19]

Security Incident

The number of DeFi attack incidents in 2024 decreased by 40%, and the amount of losses from CeFi security incidents was 6.94 billion US dollars The annual ‘Web3 Security Report’ by blockchain security company Hacken was released this week. The report shows that due to protocol improvements, better bridging, and more advanced encryption measures, losses caused by security incidents in the DeFi sector have decreased by 40% from 2023 to 2024. However, CEX has become the primary target for access control vulnerabilities and other major security risks, resulting in a more than doubled number of CeFi security incidents and losses amounting to $694 million.

The overall financial losses in the decentralized finance (DeFi) sector have significantly decreased compared to 2023, from $787 million to $474 million. In particular, losses related to cross-chain bridge security incidents have decreased from $338 million to $114 million. Despite progress in security aspects in the DeFi sector, such as the adoption of multi-party computation and zero-knowledge proof technology, it still faces many challenges. Access control vulnerabilities remain a major threat to DeFi security, as exemplified by the $55 million hack suffered by Radiant Capital. [20]

Project Focus

StakeStone launches its second Vault product, Berachain Vault StakeStone, a comprehensive liquidity infrastructure, has launched its second phase of the Vault product, Berachain Vault, which aims to provide exclusive income services for the one-stop Berachain deposit (Boyco deposit activity) and subsequent Berachain PoL (Proof of Liquidity) liquidity mining. At the same time, more blue-chip DeFi application opportunities, including trading, lending, and leverage income operations, can be unlocked through its treasury LP certificate beraSTONE/beraSBTC. Participants in Berachain Vault will receive liquidity rewards, including up to 1.5% of the total supply of STO governance tokens, BERA token rewards given by Berachain pre-mining, PoL mining income after the launch of Berachain mainnet, and Berachain ecosystem project rewards including but not limited to Kodiak and Dolomite token rewards. [21]

Highlighted Data

Gate.io Quantitative Fund has an annualized return of up to 38%, breaking the industry record. According to the latest data on December 25th, the performance of Gate.io Quantitative Fund once again refreshed the industry record: its USDT quarterly annualized return reached 31%, and BTC quarterly annualized return reached 22%, ranking first in the digital asset quantitative investment product income list. Especially in terms of short-term investment returns, the fund’s 30-day annualized return performance is particularly impressive, with USDT-based returns as high as 38% and BTC-based returns as high as 23%.

It is reported that Gate.io Quantitative Fund is operated by a top quantitative team with over three years of cooperation, using a neutral arbitrage strategy. All trades are completed internally on the platform, ensuring the safety of funds. The advantages of low threshold investment, no lock-up period, and zero handling fees make it an ideal choice for a large number of low-risk investors, while demonstrating unique competitiveness in terms of returns and flexibility. [22]

Runes trading volume on the Bitcoin network hits a new low Runes transactions on the Bitcoin network have dropped to a new low, accounting for only 1.67% of daily transactions, a significant decrease from its dominant position earlier this year. This is in stark contrast to the period from April to November when Runes typically accounted for over 50% of daily Bitcoin transactions. Daily fees for Runes transactions have remained below $250,000, indicating less network activity compared to previous periods.

The reduction of activity in Runes coincides with a broader market dynamics and a shift in investor focus: Bitcoin price volatility has diverted attention from Bitcoin-based experimental protocols such as Runes and Ordinals, which are often seen as high-risk applications; other areas, such as artificial intelligence agents, meme coins, and Ethereum NFTs, have taken market share, potentially reducing interest in Bitcoin-based token protocols. The Runes ecosystem may be cooling down. The sharp drop in network share from over 50% to below 10% indicates a significant shift in Bitcoin network usage patterns. This decline may reflect a broader market trend, namely, speculative interest has shifted to other cryptocurrency areas.

The number of digital asset investors in South Korea has reached 15.59 million, with a total holding of 10.26 trillion won in digital assets According to the report by the Korean News Agency, Lim Kwang-hyeon, a member of the Democratic Party of Korea and a member of the National Assembly’s Planning and Finance Committee, submitted data showing that as of the end of November, the number of digital asset investors in South Korea was 15.59 million, an increase of 610,000 from the end of October, accounting for over 30% of the country’s population. The total value of digital assets held by these investors is 102.6 trillion Korean won (approximately 70 billion US dollars), and the deposit amount (i.e. funds not invested in digital assets and stored in exchanges) is 8.8 trillion Korean won (approximately 600 million US dollars). It should be noted that this data includes the number of investors with accounts in the five major exchanges in Korea (Upbit, Bithumb, Coinone, Korbit, and Gopax), so there may be some duplication when the same person has accounts in multiple exchanges. The Korean government has implemented new regulatory measures such as real-name verification and KYC procedures to improve the security and transparency of the market, thereby enhancing investor confidence. These factors have collectively driven the rapid growth of the digital asset investment market in South Korea.

Market Opportunities

Airdrop Project

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

MindDAO is a member of the DataDao led by VANA. MindDAO solves this problem by establishing a community-driven data collection focused on mental health and emotion tracking. By authorizing individuals to monitor their own emotional health, MindDAO facilitates the aggregation of anonymous emotional data, enabling the community to gain valuable insights and contribute to the development of empathetic AI models. [25]

The fixed supply of MIND tokens is 100 million, with 70% of the token supply allocated to the community treasury. 10% will be distributed to early contributors and partners through airdrops. 2.5% will be allocated for token presale at a fixed price of approximately $0.05 per token. Another 2.5% of the token supply will be used to provide liquidity on Vana DataDEX. Finally, 15% of the tokens will be allocated to the team.

Participation Method:

1. Visit the official page and link the wallet address;
2. Create an account;
3. Complete the Mind Challenge to get PREMIND points;
4. Complete subsequent tasks to earn more PREMIND points.

Tip: Airdrop plans and participation methods may be updated at any time. It is recommended that users follow MindDAO’s official channels for 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 stablecoins, DeFi, infrastructure, and other fields. According to RootData statistics, from December 21st to December 27th, a total of 9 projects announced financing, totaling $24.6 million.【26】

The following are the top three financing scales:

Avalon Labs completed a $10 million Series A financing on December 23, with participation from Framework Ventures, UXTO Management, and others. Avalon Labs is an innovative company focused on the development of Bitcoin DeFi ecosystem, primarily issuing USDa, a stablecoin backed by BTC. The company is committed to transforming Bitcoin from a traditional digital store of value tool to a more functional financial instrument, providing users with diverse application scenarios.

Usual completed a $10 million Series A financing on December 23rd, with participation from Binance Labs, Kraken Ventures, and others. Usual is a decentralized stablecoin issuance platform that achieves distributed ownership and governance of infrastructure and capital pools through the governance token $USUAL, avoiding bank and counterparty risks while empowering users with control over protocol cash flow and governance, promoting sustainable decentralized development of the ecosystem.

Swan Chain announced on December 24 that it had closed a $2 million funding round with participation from DWF Labs, the Optimism Foundation, and Promotony, among others. Launched in 2021, Swan Chain (formerly known as FilSwan) is a decentralized infrastructure designed to accelerate AI applications. Leverage OP Stack’s Ethereum Layer 2 technology to combine Web3 with AI to provide a comprehensive solution covering storage, compute, bandwidth, and payments.

Next week attention

Token Unlock

According to the data of Token Unlocks, several important token unlock events will take place in the market next week (2024.12.28-2025.01.03). The total unlock value exceeds 4.29 billion US dollars.【27】

The following are the three situations before unlocking next week:

SUI plans to unlock approximately 64.19 million tokens at 12:00 AM UTC+0 on January 1, 2025, accounting for 2.19% of its circulating supply, with a value of approximately $295 million. The recent average daily trading volume of SUI is around $2.11 billion, and the impact of this unlocking on the token price is minimal.

OP plans to unlock about 31.34 million tokens, accounting for 2.32% of its circulating supply, worth approximately $61.12 million, at 12:00 AM UTC+0 on December 31, 2024. The recent daily trading volume of OP is around $383 million, and the impact of this unlocking on the token price is relatively small.

ZETA plans to unlock approximately 53.89 million tokens at 12:00 AM UTC+0 on January 1, 2025, accounting for 9.35% of its circulating supply, with a value of approximately $32.86 million. The recent daily trading volume of ZETA is around $42.03 million. The unlocking amount is equivalent to the recent trading volume, and this unlocking may cause fluctuations in the ZETA token price. The large-scale unlocking of tokens, accounting for 9.35% of its circulating supply, may generate significant selling pressure in the next few days. If there is no increased demand in the market, this pressure may have a negative impact on the price of ZETA. Investors holding ZETA tokens need to pay close attention.

Crypto Calendar

Next week (2024.12.28-2025.01.03) will usher in a series of important events that will have far-reaching impacts on the cryptocurrency market, global economy, and energy market [28]. The European Union’s specialized regulations for the cryptocurrency industry, known as the Markets in Crypto-Assets (MiCA), are set to come into effect on December 30 in the 27 member countries, signaling a new era in the regulation of EU digital assets [29]. In addition, from December 30, cryptocurrency exchanges operating in the European Union (EU) will be subject to Regulation (EU) 2023/1113 (Travel Rule Guidelines), which requires the reporting of information on fund and cryptocurrency asset transfers [30]. On January 2, 2025, the United States will release the initial claims for unemployment insurance for the week ending December 28 [31]. The number of initial claims for unemployment insurance is one of the indicators used to assess the employment situation and labor market conditions, and it can indirectly reflect the economic activity in the United States. Generally, an increase in the number of initial claims for unemployment insurance often indicates a weakening of economic activity in the United States, tightness in the labor market, and an increased demand for safe-haven assets such as gold in the market.

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2. Gate.io, https://www.gate.io/trade/ETH_USDT
3. Gate.io, https://www.gate.io/bigdata/estimate
4. Coinglass, https://www.coinglass.com/zh/pro/options/OIExpiry
5. CryptoCraft, https://www.cryptocraft.com/#detail=136202
6. Defillama, https://defillama.com/stablecoins
7. Etherscan, https://etherscan.io/gastracker
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10. Coingedcko, https://www.coingecko.com/zh/categories/pump-fun
11. Coingecko, https://www.coingecko.com/en/categories/ai-agent-launchpad
12. Coingedcko, https://www.coingecko.com
13. Gate.io, https://www.gate.io/zh/trade/MOVE_USDT
14. Gate.io, https://www.gate.io/zh/trade/VIRTUAL_USDT
15. Gate.io, https://www.gate.io/zh/trade/HBAR_USDT
16. Cointelegraph，https://cointelegraph.com/news/crypto-event-attendee-data-for-sale-scammer-gold-mine
17. The Daily Hodl, https://dailyhodl.com/2024/12/25/robinhood-ceo-vlad-tenev-predicts-stock-market-will-move-on-chain-in-merging-of-crypto-and-equities/
18. RWA.xyz, https://app.rwa.xyz/stocks
19. common.xyz, https://common.xyz/bio-protocol/discussion/26059-proposal-bridge-bio-to-solana
20. Cointelegraph, https://cointelegraph.com/news/defi-security-improvements-vs-cefi-losses-2024
21. X, https://x.com/stake_stone/status/1871907724998664612?s=46&t=ImVlGABBYv-FTaT73CStFw
22. Gate.io, https://www.gate.io/zh/institution/quant-fund?ch=INST_Quant_NewsF_20241219/
23. Theblock, https://www.theblock.co/post/332216/runes-transaction-share-on-the-bitcoin-network-drops-to-new-lows?utm_source=telegram2&utm_medium=social
24. YNA, https://www.yna.co.kr/view/AKR20241224079900002
25. MindDAO，https://minddao.gitbook.io/minddao/what-are-we-trying-to-solve
26. Rootdata, https://www.rootdata.com/Fundraising
27. Tokenomist，https://tokenomist.ai/unlocks
28. Gate.io, https://www.gate.io/zh/calendar
29. Coindesk, https://www.coindesk.com/policy/2024/12/17/esma-publishes-final-guidance-on-mi-ca-implementation-days-before-deadline?utm_content=editorial&utm_medium=social&utm_term=organic&utm_source=twitter&utm_campaign=coindesk_main
30. Cointelegraph, https://cointelegraph.com/news/eu-travel-rule-crypto-exchanges-compliance-2024
31. Jin10, https://rili.jin10.com/day/2024-11-14

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