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

Wei Meng

Crypto

Crypto crashes happen more frequently now, but what are the cause for these occurences? Here's what you need to know. 

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The crypto industry still faces sharp declines marked by fear and volatility, despite significant capital from crypto enthusiasts, and a market capitalization peaking at just under$3 trillion in 2021. Although news headlines may attribute market crashes to a few clickbait-worthy factors, better insight comes from understanding the nuances that contribute to downturns.

Explaining a market is always easier in hindsight, but we can still look through multiple layers of events to find the main drivers. In this article, we’ll explore possible causes for crypto crashes and discuss strategies to help you overcome these challenges.

A crypto crash is a sudden and significant decline in the value of digital assets, such as Bitcoin. Across financial markets, a 

 of 10% or more in a single day is often considered a crash.

 The ensuing volatility leads to widespread losses and panic selling, similar to stock market crashes. Changes in market sentiment, government regulations, or fraud and security issues can all cause crypto crashes. 

What’s Causing the Current Crypto Crash?

 has dropped from its high of nearly $3 trillion in 2021 to a value much closer to $1 trillion in 2023. Given the recent decline, investors are looking for the root causes of sell-offs. Crypto crashes have occurred due to instability within the market, in addition to economic factors such as rising inflation and interest rates, which have reduced investor appetite for risk. 

Below, we discuss some of the most common reasons for crypto crashes.

If the crypto market fails to find buyers, sellers have to keep dropping prices, starting a chain reaction that causes a drop in traded values.

It’s not as common for the two most traded crypto assets, Bitcoin (BTC) or Ether (ETH), to face liquidity issues. However, less popular tokens often see price spikes that are followed by steep crashes. When the 

, the resulting liquidity crunch caused a catastrophic loss of value in the larger crypto market.

Governments and regulatory bodies worldwide are still grappling with how to approach the decentralized nature of cryptocurrency. Regulatory authorities need to figure out how to maintain oversight of the cryptocurrency industry and protect retail investors. Sometimes, regulatory action against crypto companies is sudden, as when China 

 in 2021. Crypto investors saw a decline in the network hash rate, which may have fed into price declines.

In the U.S., the Securities and Exchange Commission (SEC) has kicked off a legal battle against the world’s largest exchanges, 

. How the lawsuits play out could have far-reaching implications for the crypto market. Exchanges could shy away from accepting American investors, which would decrease accessibility and adoption of crypto in the U.S. In general, regulatory uncertainties can create a sense of unease that leads to sell-offs.

The U.S. Federal Reserve has continued to raise interest rates to tame inflation, thereby tightening financial conditions and putting pressure on stocks and 

 such as cryptocurrencies. Since crypto prices have more closely 

, digital assets often decline in price when investor sentiment shifts in traditional financial markets.

, borrowing money to amplify returns (and losses). The 

 measures the average amount of leverage used, and can indicate the amount of funding used to trade. Borrowed money eventually needs to be returned, and during market declines, traders may scramble to cover borrowed positions, triggering further selling in positions that still have value. The use of leverage can thus increase the magnitude of a crash.

The crypto market has experienced stages of growth and downturns, followed by recoveries and declines. Volatility in the crypto space has also led to a number of major crashes. Following is a historical timeline of notable crypto market crashes.

 in June 2023 on the back of news that the Federal Reserve would potentially hike interest rates even further later this year. The Fed has been fighting record-high inflation by increasing interest rates, which tightens financial conditions through increasing the cost of borrowing. Investors then have to pay more to add leverage to trades, impacting profitability. The appetite for risk also declines as general liquidity and capital are less available for higher-risk trades.

The SEC’s lawsuits against Binance and Coinbase have led Binance to suspend Bitcoin withdrawals and U.S. dollar deposits, and have prompted trading platforms like Robinhood to remove certain coins. Uncertainty has lowered investor sentiment overall and undermined confidence. The crypto market is also still reeling from both the collapse of FTX and the entities it took down with it, and the Terra/LUNA collapse.

When fear surrounds the crypto market, Bitcoin (the largest and most popular token) acts as a bellwether, triggering price declines and selling pressure.

Predicting the exact end to crypto crashes is challenging because of crypto market dynamics and many other factors. The cryptocurrency market's volatility means that it can experience price fluctuations rapidly, so a crash's duration depends upon the underlying causes.

While some crypto market downturns can be relatively short-lived, others can persistently extend for longer periods. However, you can monitor the following factors:

When the crypto market is crashing, an investor needs a clear, strategic plan of action. The following are some strategies to consider:

Be realistic about your crypto investments and the volatility you’re likely to face during market downturns. Only invest what you can afford to lose, and manage withdrawals of any borrowed money closely. Some strategies to help mitigate losses include diversifying your portfolio, setting stop-loss orders and avoiding emotional decision-making.

Throughout major downturns, the crypto sector has remained resilient, and the market for cryptocurrencies is still developing and growing. Investing with a long-term view has served many crypto investors well. Crypto crashes have often presented attractive opportunities to buy. Given the recent recovery in the crypto market, investors may consider continuing to hold.

Before making any investment decisions, keep up with the most recent news and changes in the cryptocurrency market — and undertake 

. The decision to buy crypto should ultimately be based on both your financial situation and your evaluation of market trends. 

Navigating a crypto crash requires a thoughtful approach and careful decision-making. It may be disheartening to experience a crypto crash, but crashes also present a unique opportunity for the well-informed and prepared investor.

Why Is Crypto Crashing Today: How to Navigate the Crash

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards