Jan 6, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — Markets Snap Five-Day Loss Streak 

Investors are now seizing the opportunity to buy the dip in U.S. stocks after a five-day decline that erased over $1 trillion in market value. Wall Street has broken its longest losing streak since April, with the Nasdaq-100 rebounding 1.7% and the S&P 500 rising 1.3% on Friday, January 3. These gains slightly offset the week's sell-off, which had continued into the new year following a tough December.

Despite concerns about slowing earnings growth among tech giants like the Magnificent Seven, traders remain optimistic, especially regarding AI leader NVIDIA Corporation. The market believes that, as long as retail investors keep investing in AI, the associated stock market boom is expected to persist. 

Stocks reached their session highs in the afternoon after Mike Johnson was reelected as speaker of the U.S. House of Representatives, indicating potential support for a business-friendly agenda. Meanwhile, bond yields rose, with the 10-year hitting 4.6% following comments from Richmond Fed President Tom Barkin about maintaining restrictive rates. U.S. manufacturing showed modest growth, with new orders at their highest since early last year, while investors assessed economic strength against the possibility of slower interest-rate cuts.

Weekly Crypto Highlight — AI Agent Spring Coming

Many investors are eagerly anticipating an Alt Season, a period when altcoins typically surge in value. However, current market dynamics suggest we may not see a widespread altcoin rally. The sheer number of tokens, combined with limited liquidity, has led to what's known as altcoin dispersion, making it crucial to select the right sectors and tokens.

, which are thriving even as the broader market declines. This nascent sector is experiencing rapid advancements, and its associated tokens face less pressure from venture capital unlocks. Many of its top protocols lack centralized exchange listings, indicating more buyers may enter the market.

Those investors who missed previous opportunities, such as the DeFi summer of 2020 and the Alt Layer 1 trade, now have another chance. Instead of targeting individual AI agents, the best risk/reward strategy lies in investing in infrastructure plays, which serve as the foundational tools for the sector.

The leading AI agent player is Virtuals Protocol, a platform for launching tokenized AI agents on the Base network. By purchasing tokens like Luna by Virtuals (LUNA) and VaderAI (VADER), users gain governance rights over specific agents, which allows them to both influence development and share in profits. 

Recently, daily protocol fee revenues dropped significantly in mid-December 2024 as activity slowed for the holidays. However, speculation around agent-associated tokens surged as the new year approached. Currently, Virtuals Protocol generates over $1 million in daily fees, though this is 50% less than figures for early December. Despite these challenges, the VIRTUAL token has more than doubled in value, reaching a market capitalization of $4.6 billion.

Other highlighted opportunities include Zerebro, which is pivoting to a full-stack framework for AI agents; ARC, with its Rust-based framework; and 

 (GRIFFAIN), a natural language on-chain search tool. These projects are well-positioned for future growth in the evolving landscape of AI technology.

 as we delve into leading AI agent tokens and the past week’s market movements. 

Advanced

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Weekly Institutional Insights: Market Snaps Five-Day Loss Streak; AI Agent Spring Coming

Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

December's end-of-year options expiration brought an unexpected drop as realized volatility fell to the lowest levels of the month. Perpetual swap open interest remained stable, indicating these markets weren't heavily used for hedging against expired options, likely contributing to the muted volatility. 

While most expired open interest in Bitcoin (BTC) and Ethereum (ETH) hasn't been reinvested, the balance of calls and puts remains consistent. Notably, ETH options are pricing in higher implied volatility as compared to BTC, particularly for shorter expirations, leading to a flat term structure for ETH, while BTC is offering cheaper options exposure.

In the perpetual markets, low volatility and minimal spot movements have led funding rates for nearly all tokens to mirror broader market sentiment throughout the holiday season. On the options side, BTC's term structure is noticeably lower and steeper than ETH's, with realized volatility now dipping below implied volatility levels, highlighting an intriguing shift in market dynamics.

Please check out the report’s highlights.

Open Interest Solid Amid Year-End Options Expiration

Although open interest for both BTC and ETH perpetual swaps hasn’t returned to early December 2024 highs, it remained robust throughout the significant end-of-year options expiration event. This suggests that these markets weren’t heavily utilized to 

 of the expiring options contracts, likely contributing to the lack of volatility observed during this period. Instead, trading volumes have dipped noticeably during the winter holiday season, coinciding with a collapse in realized volatility back to December 2024’s lowest levels.

BTC Option Curve Remains Steep During Call-Put Parity

The expiration of December's end-of-year options didn’t trigger the anticipated surge in volatility; instead, realized volatility has plummeted to the lower end of its recent range. The implied volatility term structure remains steep compared to both its recent behavior and ETH's, with longer-dated implied volatility around 57%, and 1-week at-the-money options trading about five points lower. Much of the expired open interest hasn’t yet been rolled into new positions, maintaining a neutral balance between puts and calls. Consequently, BTC's options market positioning is relatively neutral, lacking the leverage it had at the start of December 2024.

Huge ETH Option Expiring Doesn’t Cause Volatility

A late December spike in realized volatility didn’t carry into the new year, with ETH’s spot price currently exhibiting volatility below that of short-tenor implied volatility. Interestingly, the implied volatility term structure has undergone a steepening and re-flattening over the past week, contrasting with BTC’s slightly steeper profile. This suggests that ETH’s options market is anticipating higher short-term volatility in spot price movements. 

Despite the significant expiration of options open interest at the end of December 2024, which didn’t lead to a rollover into later expirations, call options continue to dominate the market and have increased at the start of 2025.

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 2, 2025): BTC Options Continue to See Call-Put Parity, With Lower Short-Term Volatility Expected

Dive into FLock, a decentralized platform that revolutionizes the way AI models are developed, trained and deployed.

Artificial intelligence (AI) is poised to transform countless industries, but its development often raises questions about privacy, control and inclusivity. 

 is a unique decentralized platform that democratizes AI training, fine-tuning and inferencing. With its blockchain-powered infrastructure, FLock ensures transparency, security and community-driven decision-making, paving the way for AI models that align with established societal values. 

In this article, we’ll explore how FLock decentralizes AI training, its key features and its potential impact on developers, communities and users.

 platform that revolutionizes the way AI models are developed, trained and deployed. By leveraging blockchain technology and a novel approach called 

, FLock addresses critical issues in AI development, such as centralized control, lack of transparency and privacy concerns.

At its core, FLock’s mission is to democratize AI by enabling communities to participate directly in the creation and refinement of AI models. Through federated learning, FLock trains AI models across multiple decentralized devices or servers. This method ensures that data remains local, eliminating the need for raw data exchange while still enabling robust model training. By decentralizing the training process, FLock not only protects individual privacy, but also fosters a more inclusive ecosystem in which diverse contributors can collaborate.

What sets FLock apart is its integration of 

. This ensures that all contributions — whether data, compute power or feedback — are transparently recorded and fairly rewarded. Blockchain tech’s immutable ledger enhances trust among participants and safeguards the process against manipulation. Additionally, the platform’s on-chain incentive mechanisms encourage participation from a wide range of contributors, ensuring that rewards are distributed equitably.

Ultimately, FLock empowers communities to develop bespoke AI models tailored to their specific needs. By decentralizing the process and prioritizing transparency and collaboration, FLock breaks the monopoly of large corporations, creating an AI ecosystem that aligns with public ethics and societal values.

, an Oxford alumnus with a robust background in AI and blockchain technology. Sun, who serves as FLock's CEO, has an impressive career trajectory, having worked as the Director of AI for the Royal Bank of Canada and as an AI Research Fellow at Imperial College London. His vision for FLock stems from a deep understanding of both the technical and ethical challenges of AI development.

The founding team also includes other Oxford alumni, boasting over a decade of combined experience in AI research and the cryptocurrency industry. This team brings a collective blend of academic excellence and practical expertise that positions FLock to lead the decentralized AI movement.

FLock has successfully raised $11 million in funding across two rounds, reflecting strong investor confidence in its vision. In May 2024, FLock secured a $6 million seed round co-led by Lightspeed Faction and Tagus Capital, with additional backing from Digital Currency Group (DCG), Volt Capital, OKX Ventures and Inception Capital.

Later, in December 2024, FLock announced a $3 million successful funding round led by DCG and joined by prominent names like Animoca Brands, Fenbushi Capital, GnosisVC and GSR. These investments are being channelled into enhancing the platform’s testnet and federated learning client, accelerating FLock’s mission of enabling secure, collaborative AI development.

With this funding and over 1,500 nodes contributing from platforms like Numerai and Kaggle, FLock is rapidly scaling its impact on decentralized AI training.

FLock AI revolutionizes AI development through its decentralized training framework. This approach allows participants to contribute to AI model training without ever sharing their personal data. Instead, models are trained locally across devices using federated learning, which ensures that data remains with its owners while still enhancing the accuracy of the model overall. 

FLock’s reward system is designed to incentivize active participation. Contributors who provide data, computational power and/or feedback are compensated with FLOCK tokens, ensuring a fair distribution of rewards. 

FLock empowers its community through a robust governance framework. Decisions regarding AI model development, deployment and ethical considerations are driven by the community, ensuring alignment with established societal values. Through blockchain-based voting mechanisms, contributors can influence the direction of AI projects, fostering transparency and public accountability. 

FLock’s modular architecture allows contributors to participate in specific aspects of AI model development. Whether providing raw data or computational power or even refining algorithms, the platform enables a collaborative and scalable development process. 

At the core of FLock’s philosophy is its commitment to privacy and security. By leveraging blockchain technology, the platform ensures that no single entity controls the AI development process. Data remains local and protected by cryptographic measures, while the immutability of blockchain guarantees transparency in every transaction and model update. 

 begins with a blockchain and an AI layer.

The blockchain layer underpins FLock’s incentivization and security mechanisms.

The AI layer facilitates model training, refinement and deployment, leveraging both centralized and federated approaches.

Let’s have a look at the supply and demand for the FLOCK token.

FLock adopts a 1:2 ratio model between team/investors (33.3%) and community (66.7%), prioritizing community-driven growth and ecosystem expansion. The majority of tokens are allocated to incentivize user participation and long-term ecosystem success.

FLock aims to improve the future of AI development by decentralizing the training process and ensuring transparency, privacy and inclusivity. By leveraging blockchain and federated learning, FLock empowers communities to contribute to AI creation without compromising on privacy. Its innovative reward system and community-driven governance foster a fair and collaborative ecosystem. 

With significant backing and a growing network of contributors, FLock is positioning itself as a leader in decentralized AI, offering a more ethical and secure alternative to traditional AI development models. As it continues to scale, FLock is set to transform the way AI models are built and deployed.

 — and earn a share of a 10 million FLOCK prize pool. For more details, visit 

Intermediate

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FLock AI: Decentralized AI Training

In this tutorial, we’ll explore how you can complete a series of tasks in Network3 for Bybit Web3 Airdrop Arcade.

Task 1: Register for a Network3 Account and Connect Your Bybit Wallet 

: Navigate to the campaign page and click on the 

task. Click on the task, and Galxe will ask to redirect you to the Network3 register page.

: Register for a Network3 account using your email address. You may indicate a 

Task 2: Download the Network3 App and Run a Node for One Hour

 and choose your operating system to download the Network3 app.

 or powerbutton, depending upon which operating system you’re using. For ease of reference, we’ve used macOS and iOS as examples below.

: Keep running the node until the timer reaches 

Beginner

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How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Crypto

Getting crypto for free may sound too good to be true, but you can...if you do something in return! Read all about crypto faucets here.

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Did you know that back in 2010, you could get 5 BTC for free? As much as we might not believe it, it’s true! Gavin Andresen, often known as the face of 

back in June 2010, giving users 5 BTC on a first-come, first-served basis.  

A crypto faucet is a website or an application that rewards you with cryptocurrencies in return for completing relatively straightforward, non-labor-intensive tasks, such as completing a captcha, viewing ads, or completing surveys. 

This guide will discuss crypto faucets, their relevance in today’s world, and the different types of crypto faucets available today. 

A crypto faucet rewards you with crypto for completing simple tasks. The reward mechanism is like a “leaking faucet,” dripping crypto after every successful task completion. 

”? Well, yes! The only input commodity you need in order to get free crypto out of a crypto faucet is 

 to complete different tasks. However, don’t get your hopes too high, as the rewards incurred are far less than you might expect. 

You only get a few cents every hour, and even with the highest paying crypto faucets, you can get only 30 cents an hour — if you’re lucky. Just as a leaking faucet drips successive water drops, a crypto faucet drips tiny amounts of crypto. In a typical Bitcoin faucet, the rewards get disbursed in satoshis, the smallest bitcoin unit, equivalent to 1/100 millionth of a bitcoin.

Crypto faucets are not widely adopted, due to the lower payouts and shady techniques that many faucet sites use to make money. The whole purpose of a crypto faucet is to spread awareness among people by distributing “free cryptos.” However, it has since transformed into an entirely new business model to yield profits from all kinds of arbitrage. 

Before understanding how a crypto faucet works, we need to understand its core business model. Companies run crypto faucets to maximize their revenue and earn profits. A significant portion of their revenue comes from “traffic arbitrage,” 

 that they send traffic to different advertising networks, earn revenue and share a small portion of it with users. 

The only traffic source for crypto faucets is 

 viewing these ads who come from these ad networks. In return for viewing these ads, you get a tiny portion of the revenue coming from the ad networks in the form of crypto rewards. 

This revenue-share arbitrage model isn’t just limited to ad networks, however. These faucets also work with captcha, gaming networks, survey companies, affiliate networks and other platforms where the revenue-share model makes good business sense.

The more time you spend on a crypto faucet site completing the tasks, the more money you can make. The tasks are dead simple if you look at them, which encourages people to devise algorithms and bots that can skim through these faucets and complete the tasks on their behalf. However, crypto faucet sites try their best to prevent bots from using the platform, in order to avoid being penalized by ad networks. 

Note that, due to high transaction fees, a minimum withdrawal limit is usually in place. Networks use a micro wallet and a micropayments platform to disburse faucet rewards once the minimum withdrawal limit is reached. Many crypto faucet sites also use their native tokens, which you can later convert to any supported 

 through either their platform or any third-party exchange.

Unlike other crypto-based applications, a crypto faucet is relatively simple to use. You don’t need to have a technical background. To use a crypto faucet, you only need to follow these simple steps: 

Even though every crypto faucet has a different interface with which to interact, all crypto faucets follow the same steps. Once you sign up and complete your profile, you can add your wallet address. It is important to note that most of these faucets use micro wallets to send micropayments, and you can’t add your regular Bitcoin or Ethereum wallet address. 

The most common micropayment wallet that these crypto faucets use is 

. You can sign up on their website and set your micro wallet to receive incoming payments. You can use your FaucetPay wallet address on any of the crypto faucets that you’re using. 

Once you’ve signed up and added your wallet address, you can select any task you wish to complete from the main dashboard. For each task, you can see the completion time and the payout (reward) that you get once you complete that task.

Although each crypto faucet offers various tasks, 

 and make sure that you don’t give your personal information. For security reasons, we do recommend using a different browser while completing these tasks.

Once you complete the task(s), you can see the rewards in your balance. Many faucets allow you to choose the primary currency for the rewards, such as Bitcoin, Ethereum, or any other supported currency. Once you hit your minimum withdrawal limit, you can withdraw your earnings from the crypto faucet platform directly to the micropayment wallet that you added in the first step. 

However, you can’t just sit and spend 20 hours a day on these tasks. These crypto faucets have certain limitations for the number of tasks you can complete within a day. This limit prevents bots and automated tools from abusing the faucet system. If the crypto faucet encounters any suspicious activity coming from your account, they can either suspend your account temporarily or block it immediately. 

Crypto faucets aren’t a recent phenomenon. They are one of the earliest applications in the crypto space, tracing back to 2010 when there was only one cryptocurrency: Bitcoin. At that time, very few people knew about Bitcoin, deeming it an experimental currency. 

Gavin Andresen, a well-known cypherpunk and Bitcoin core developer, launched the first crypto faucet back in June 2010. It was a Bitcoin faucet, and its primary purpose was to spread awareness about Bitcoin. Another reason for building this faucet was that there was no Bitcoin exchange then — so this faucet made it easier to acquire bitcoins. 

The original announcement post for the first Bitcoin faucet

At that time, Bitcoin was worth pennies. Very few people took it seriously. Gavin added his own 1,100 bitcoins to his faucet, giving away 5 BTC to anyone who came on the faucet platform and completed a simple captcha. As time passed, this faucet gave away a total of 19,715 bitcoins, all coming from Gavin’s wallet. 

Concurrently, more cryptocurrencies emerged, and developers started making their small faucets as hobby projects. However, it didn’t take long for online publishers to realize the potential of making a profit from crypto faucets with an arbitrage-focused business model. 

These revenue-generating crypto faucets soon proliferated because of the sustainability brought by the arbitrage business model. Today, there is a myriad of crypto faucets offering reward payouts in many different cryptocurrencies. We also see considerable development in the micropayment wallet space, an essential component of modern crypto faucets. 

However, these crypto faucets didn’t receive mainstream attention, due to the low rewards and the amount of time it takes to accumulate them. Modern crypto faucets need to pass the test of time, and we may expect innovative business models to bring mainstream attention.

Back in the day, there were crypto-specific faucets paying rewards in only a single cryptocurrency. The first one ever was a Bitcoin faucet, paying only BTC to users who claimed them by solving a captcha. Soon after there were Litecoin faucets, Ethereum faucets, and other currency-specific faucets coming into the ecosystem. 

Today, crypto faucets have evolved to support reward payouts in multiple cryptocurrencies. You can choose to withdraw your rewards in any of the cryptocurrencies supported on the faucet’s platform. 

Here is a list of well-known crypto faucets that are still in the game: 

The concept of crypto faucets started with the mission of spreading awareness about cryptocurrencies. Now, they have evolved into sophisticated platforms with novel business models. 

Crypto faucets haven’t received the attention needed for mainstream adoption, and they still need to pass the test of time. However, if you have some spare time and want to earn free crypto, hop over to one of your favorite crypto faucet platforms to earn some pocket change.

So, with the newfound knowledge in crypto, why not sign up to Bybit?

A Beginner’s Guide: What Is a Crypto Faucet?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards