TL;DR

• Fed’s officials are discussing potential pause of QT, amid the unsolved US debt ceiling. Bessent also shared that long-dated debt issuance is not on the table.
• This week’s incoming data includes 2024Q4 GDP revision, core PCE, home sales, durable goods orders, personal income and spending data.
• The crypto market lacks an upward catalyst and generally shows a downward trend.
• Bybit’s stolen ETH has been fully recovered, while SOL dipped below $160 and ETH dropped under $2,700.
• Around $2 billion worth of SOL will be unlocked on March 1st, putting pressure on SOL.
• Near introduces Shade Agents — Autonomous AI factory system. UMA, Polymarket, and EigenLayer are collaborating to develop new oracle standards.
• This week, raised $157M, (+5% from previous week), Infra projects were largest share of funding

Macro Overview

Fed’s officials in discussion for potential pause of QT, amid the unsolved US debt ceiling. Bessent also shared that long-dated debt issuance is not on the table.

Recently released Fed minutes from January 28–29 rate setting meeting showed the Fed officials discussed a possible pause or slow down of quantitative tightening (QT), given that the approaching US debt ceiling may bring more complexity to the Fed’s ability to assess market liquidity. As Nick Timiraos from the Fed pointed out, they are considering pausing or slowing down the balance sheet reduction until the debt ceiling issue is resolved. Also, US Treasury Secretary Bessent said in an interview that, for now, expanding long-dated government debt issuance is not on the table.

Another consideration for halting QT is that the Fed is running out of the overnight reverse repo, which is now merely $69tn. Further asset reduction will consume directly the reserves from the Fed, and trigger halting QT when the asset level reaches the “ample reserve” threshold. In our previous report “The Road Ahead: When Will the Fed End Quantitative Tightening and What Could It Mean for the Crypto Market?”, from a prudent perspective, it is predicted that it might be possible for the Fed to initiate discussions in January, outlining a roadmap to halt QT in March, and implementing policy changes between May and July. Given that at this moment the discussion of halting QT is on the table, we might see further steps taken in the coming months.

Highlights for the US market this week will include an update to 2024Q4 GDP, durable goods orders and core PCE data. The market consensus expects a slight downward revision of Q4 GDP this Thursday, and the core PCE, which is the Fed’s preferred inflation indicator, will be rolled out this Friday. Additionally, home sales, consumer confidence, personal income and spending data will also be closely watched from the US.

The dollar index was experiencing another adjustment last week, almost hitting a two-month low. Investors are assessing the economic outlook, geopolitical tensions and future policies’ impacts on major currencies.

The total asset level dropped below $6.8tn last week, while recently released last month’s Fed minutes showed that officials are in discussion for a possible pause or slowdown of QT, amid the unsolved debt ceiling issue.

Gold price escaped from investors’ profit taking and made another new high last Thursday, up almost 2% last week. This is largely due to the arising uncertainties in geopolitical situations, especially Russia-Ukraine, and global economic growth.

Crypto Markets Overview

1. Main Assets

As of this Monday, BTC is trading at around $96,000 and ETH at $2800, remaining unchanged and increasing nearly 4% , respectively. Due to the rumors on the Solana ecosystem, SOL experienced a decrease by 13.21% on a weekly basis. Unfortunately, with the unlocking of the OTC tokens from FTX on March 1st, there seems to be a downward trend especially at the ratio of SOL/ETH. Most notably, Jupiter, which is at the center of the controversy, remains resilient in price around $0.85.

2. Total Market Cap

The total market capitalization of the cryptocurrency market stands at $3.12 trillion this Monday. Excluding Bitcoin and Ethereum, the market cap amounts to $876.6 billion, reflecting decreases of nearly 0% and 2%. Altcoins remain sluggish as always.

3. Net Inflows

Last week, the total market value of stablecoins reached $226.5 billion, setting a new high for this cycle, with an increase of $1.0 billion compared to the previous week. USDT increased by 462 million and USDC increased by 726 million. Despite the turmoil with Bybit last week, USDe only decreased by 68 million.

4. Top 30 Crypto Assets Performance

The cryptocurrency market showed a downward trend last week. ETH rose by 4% due to the Bybit incident, as the market mainly hoped that Bybit would purchase approximately 440,000 ETH to compensate retail investors’ losses. After confirming the completion of the purchase, ETH also began to decline, with its current increase narrowing to 1.5%. SOL fell by 14%, and the SOL/ETH exchange rate also continues to show a downward trend.

The Key Crypto Highlights

1.Ethereum Community Argument: Can Ethereum rollback response to Bybit Hack?

Unlike Bitcoin’s 2010 rollback, which fixed a clear protocol bug in a small and simple network, Ethereum’s situation is much more complicated. The Bybit hack happened because of a compromised multisig interface, not an issue with Ethereum chain, and the stolen funds were moved immediately. Unlike the 2016 DAO hack, where stolen funds were frozen for a month, giving the community time to intervene, Ethereum today is deeply connected to DeFi and cross-chain systems. Stolen funds can be quickly swapped, used as collateral, or moved across chains, creating a complex web of transactions that cannot be untangled. Rolling back the chain would disrupt many legitimate transactions, including those tied to off-chain activities, leading to chaos. Additionally, the Ethereum community has consistently opposed irregular state changes, as shown in the rejection of EIP-999 in 2018, which aimed to recover frozen funds.

2. Near Shade Agents — Autonomous AI factory system powered by blockchain technology

Near has launched Near Shade Agents, aiming to improve the current blockchain user experience. Shade Agents introduce fully autonomous factory systems made up of two key components: Worker Agents_run AI logic and verified off-chain processes within TEEs, and Smart Contracts_which store the worker agent’s code hash. In the end, the system will use NEAR’s Chain Signatures for decentralized key control and sign transactions. This system enables tasks, asset management, and decision-making to be executed autonomously while maintaining security and transparency. Potential applications include mindshare trading agents (e.g., using metrics from @KaitoAI), decentralized solvers for intent-based protocols, prediction markets, automated yield optimizers, AI-driven hedge funds, and agent-based DAOs, among others.

3. UMA, Polymarket, and EigenLayer are collaborating to develop a next-generation oracle

UMA, Polymarket, and EigenLayer are working together to create a new prediction market oracle, that aims to rapidly grow the prediction market ecosystem. The project focuses on preventing bribery attacks by using EigenLayer’s security features and handling complex or subjective questions with UMA’s Data Verification Mechanism (DVM), which ensures fair and reliable dispute resolution. By combining UMA’s expertise in oracles, Polymarket’s wide adoption, and EigenLayer’s technology, the goal is to set a higher standard for prediction market oracles. To make the system more efficient, a dynamic bonding system will adjust bonds and challenge periods based on market conditions. Additionally, the new oracle will allow markets to choose their own tokens for dispute resolution, making the process more aligned with their communities and encouraging direct participation.

Key Ventures Deals

1.Universal secured $9M

Universal is a project aimed at eliminating restrictions related to cross-chain transactions,has raised $9M funding round led by a16z, participants from Coinbase Ventures, Four City Capitals, Data Tech. The project focuses on four key features: secure and verifiable custody for underlying assets, instant minting and redeeming of uAssets, efficient cross-chain transfers (coming soon), and bringing off-chain assets on-chain. At the core of Universal’s unique feature is its uAssets technology 1:1-backed wrapped tokens, supports the trading of over 80 assets across popular EVM and non-EVM blockchains without relying on bridges. These tokens enable users to trade native cryptocurrencies directly within their networks, ensuring greater convenience, eliminating fragmented liquidity, and improving efficiency.. The platform is already live on Base, Polygon, and Arbitrum.

2. Fluent Labs has secured $8M in Seed and Seed-Extension

Blockchain developer Fluent Labs has raised $8 million in seed and seed extension rounds led by Polychain Capital to build out its Ethereum Layer 2 blended execution network. Other participants are Primitive, dao5, Symbolic Capital, Builder Capital, Nomad Capital, Public Works also and notable angel investors such as Balaji Srinivasan, Mustafa Al-Bassam,…Fluent highlighted that current on-chain execution environments are constrained by the limitations of virtual machines, programming languages, and tooling, which restrict what developers can build. Project introduces a unified execution environment that seamlessly integrates Wasm, EVM and SVM applications. Fluent’s architecture enables developers to combine the best features of those chains into one chain without compatibility concerns. The vision is to create a user experience so seamless that users interact with applications without needing to worry about the underlying blockchain infrastructure. For example: DEX written in Solidity, could support Solana tokens, enabling users to swap, perform flash loans between ERC-20 tokens and SPL tokens. Just as modern internet users don’t think about protocols like TCP/IP or HTTP when browsing websites.

3. Altius raised $11M in Pre-Seed

Altius has successfully raised $11 in Pre-Seed round co-led by Pantera Capital and Founder Fund, Other participants include DCG, Amber , Archetype Ventures,…Altilus extends modularity to the blockchain execution layer by developing a VM-agnostic modular execution stack. This stack decouples from single binary implementations and network designs, enabling seamless integration with any L1s, L2s, or app chains. Point of approach is designed to achieve Web2-level performance for on-chain use cases in a multi-chain future, ensuring that onboarded chains are future-proofed for scalability and efficiency.

The number of deals closed in the previous week was 26, with Infra leading the way with 11 deals, representing 42% of the total number of deals. Meanwhile, Data had 7 (27%), Defi had 6 (23%), Social had 2 (8%), Gamefi had 0 deal

The total amount of disclosed funding raised in the previous week was $157 million, 30% deals (8/26) in previous week didn’t public the raised amount. The top funding came from Infra sector with $50 million. Most funded deals: Blockaid with $50M and Cygnus $20M

Total weekly fundraising rose to $157 million for the 4rd week of February, an increase of +5% compared to the week prior. Weekly fundraising in the previous week was up -50% year over year for the same period.