This week, markets bounced back in a big way. Bitcoin surged over 8%, while XRP climbed nearly 10%, hitting a multi-year high of $3.38 last Thursday. Solana’s SOL was the standout performer, reaching an all-time high of $294.33 on Sunday, according to CoinMarketCap.
However, DeFi-native cryptocurrencies lagged behind. The sector's total market cap underperformed compared to the broader altcoin market, with a roughly 50% gap between DeFi’s performance and the overall market (TOTALDEFI vs. TOTAL3).
Ethereum and DeFi’s Long Road to Recovery
Ethereum and most DeFi-native tokens are still far from their 2021 all-time highs—the peak of DeFi’s golden era before the FTX collapse. In a move to support the ecosystem, Ethereum co-founder Vitalik Buterin announced that the Ethereum Foundation will provide liquidity by lending 50,000 ETH (worth approximately $165 million) on the AAVE protocol.
Despite this, DeFi’s Total Value Locked (TVL) remains below its 2021 highs, currently sitting at $125 billion across all chains. Ethereum’s share of TVL, measured in ETH, is around 20 million ETH, down from its peak of 29 million ETH in 2021.
AAVE, the dominant DeFi lending protocol, stands out in this space. It has been growing steadily, hitting a record $23 billion in TVL in December. It’s also the first to benefit from the Ethereum Foundation’s deposit.
The Rise of DeFAI: Can AI Revive DeFi?
The DeFi sector is searching for a fresh narrative, and DeFAI (Decentralized Finance + AI) is emerging as a potential game-changer. AI-powered agents could help users navigate DeFi, addressing one of the biggest barriers—user experience. Imagine an AI chatbot that recommends and executes DeFi transactions on your behalf.
One of the early players in this space is Griffain, which launched its token in December. The protocol operates on a transaction-based model, where users pay small fees in SOL for AI-powered transactions. While the sector is still in its early days, this idea could gain traction.
Bitcoin’s Volatility and Trump’s Crypto Moves
Turning back to the broader market, two key events shaped sentiment this week:
📌 U.S. CPI Data: Inflation figures were in line with expectations, with YoY CPI at 2.9% and Core CPI slightly better than forecast at 3.2%. This helped push Bitcoin back toward $100,000.
📌 Trump’s Inauguration: Markets had high hopes for crypto-friendly policies, driving Bitcoin close to its all-time high. But when President Trump made no mention of crypto in his speech and didn’t sign any crypto-related executive orders, Bitcoin briefly dipped below $90,000.
Despite the disappointment, Trump and Melania Meme Coins—launched by World Liberty Financial—debuted with a combined market cap of $9 billion, and the official Trump token is already ranked 24th by market cap. The firm also raised $300 million in funding.
Later, a short squeeze triggered a 10% rally, sending Bitcoin to a new all-time high of $109,588. Optimism remains, as Trump is expected to sign executive orders, including one establishing a Crypto Advisory Council and another rescinding the controversial SAB 121 accounting rule.
Adding to the momentum, the new SEC acting chair, Republican Mark Uyeda, announced a crypto-focused task force, signaling a shift in regulatory stance. The SEC stated:
“The Task Force’s focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.”
This announcement helped push Bitcoin above $107,000 before a slight cooldown.
What’s Next?
🔹 Trump’s next moves: If he signs crypto-related executive orders today or tomorrow, we could see another price surge.
🔹 FOMC meeting next Wednesday: The Fed’s interest rate decision and press conference could also have a significant impact on markets.
Stay tuned—crypto is in for an eventful week. 🚀
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