The crypto market experienced a broad correction in early January, with Bitcoin (BTC) and Ethereum (ETH) posting notable declines. Despite this, key on-chain metrics and ecosystem developments reveal strong underlying momentum—particularly on the Solana network, which recently recorded a 24-hour decentralized exchange (DEX) trading volume exceeding the combined total of Ethereum and Base.
This article unpacks the latest market movements, institutional trends, and pivotal developments shaping the current landscape of decentralized finance (DeFi) and blockchain ecosystems.
Market Overview: BTC and ETH Retreat Amid Macro Pressures
According to recent data, BTC dropped 5.14% over 24 hours, settling around $96,542. After testing resistance near $102,500, the asset faced significant selling pressure, briefly dipping below the $96,000 support level. While technical indicators suggest a potential short-term rebound—evidenced by the MA5 nearing a crossover above MA10—the broader outlook remains cautious. Investors are advised to monitor whether the $96,000 zone holds as a critical support.
ETH fared worse, declining 8.30% to $3,367.98. The dip followed rejection at $3,700, pushing prices into a familiar consolidation range last seen in late December. A test of the $3,300 support level appears likely in the near term.
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ETF Flows Signal Mixed Sentiment
Spot Bitcoin ETFs saw a net inflow of $52.39 million on January 7, reflecting sustained institutional interest. In contrast, Ethereum spot ETFs recorded an outflow of $86.79 million, suggesting cooler demand despite ETH’s foundational role in DeFi.
Meanwhile, broader market sentiment remains "greedy," with the Fear & Greed Index rising from 76 to 78. However, traditional markets also weakened—Nasdaq fell 1.89%, S&P 500 dropped 1.11%, and gold prices hovered near $2,650/oz, indicating risk-off tendencies amid tightening monetary conditions.
Notable Gainers: Meme and AI Tokens Shine
Despite the downturn, select altcoins posted impressive gains:
- $MLG: Up 278.3%, this meme coin rooted in gaming culture gained traction after endorsement by FaZe Clan co-founder Banks. Its surge highlights the growing convergence between esports communities and crypto adoption.
- $MAX (Oraichain): Rose 74.6%, driven by its positioning as an AI agent on Solana focused on oracle services and data economies. With over 60% of tokens staked and limited circulating supply, market dynamics favor reduced sell pressure.
- $NCT (PolySwarm): Gained 45.4%, capitalizing on rising demand for blockchain-based cybersecurity solutions. As threats evolve, decentralized threat intelligence platforms like PolySwarm are gaining relevance.
These movements underscore investor appetite for niche narratives—especially those intersecting AI, security, and community-driven projects.
On-Chain Insights: Institutional Accumulation vs. Exchange Outflows
One of the most compelling trends is the surge in corporate Bitcoin holdings. Over the past year, institutional BTC holdings have grown 2.24x—from 262,635 BTC to 590,649 BTC—according to Bitwise research. This reflects deepening confidence in Bitcoin as a long-term store of value.
Concurrently, exchange reserves have declined since November, per Coinglass data. This outflow suggests more BTC is being moved into cold storage or long-term wallets, reducing available supply and potentially supporting future price appreciation.
However, macroeconomic headwinds persist. The Fed’s December rate cut was offset by rising expectations for prolonged higher rates, strengthening the U.S. dollar and constraining global liquidity. As a result, BTC’s correlation with equities like the S&P 500 has re-emerged, increasing downside risk in risk-averse environments.
Solana Takes Center Stage: DEX Volume Dominance
In a striking development, Solana’s 24-hour DEX trading volume hit $3.98 billion—surpassing the combined volumes of Ethereum ($1.71 billion) and Base ($1.21 billion). This 47.66% week-over-week increase highlights growing user engagement on Solana-based platforms.
While Solana’s total value locked (TVL) remains lower than Ethereum’s, its high trading volume relative to TVL indicates strong liquidity turnover and active speculation—likely fueled by AI-integrated applications and low transaction fees.
Ethereum and Base, by comparison, show higher TVL-to-volume ratios, suggesting capital is more often locked in yield-generating protocols rather than actively traded. This contrast reflects differing use cases: Solana leans toward fast-paced trading and emerging dApps, while Ethereum continues to anchor long-term DeFi strategies.
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Key Ecosystem Developments
Backpack Acquires FTX EU for $32.7M
Backpack Exchange has acquired FTX EU for $32.7 million, with approvals from both the FTX bankruptcy court and Cyprus’ securities regulator (CySEC). Leveraging FTX EU’s MiFID II license, Backpack plans to launch regulated crypto derivatives—including perpetual contracts—in the EU by Q1 2025.
The acquisition includes a commitment to return user funds first, aiming to rebuild trust in post-FTX Europe. With MiCA regulations raising compliance barriers, Backpack’s move positions it as a serious player in Europe’s evolving crypto landscape—though it will face competition from established platforms like Coinbase.
Sol Strategies Invests $25M CAD in Solana Ecosystem
Toronto-listed Sol Strategies (HODL) has drawn down $40 million CAD from a $2.5 billion credit facility, allocating $25 million toward Solana ecosystem investments. The firm plans to acquire substantial amounts of SOL for staking and validator operations.
Already staking over 1.5 million SOL (~$450 million CAD), Sol Strategies exemplifies growing institutional conviction in Solana’s scalability and developer momentum. Under CEO Leah Wald, the company’s stock has surged 2,000%, reflecting investor confidence in its strategic pivot.
Aave V3 Deploys on Aptos Testnet
Aave has deployed its V3 protocol on the Aptos testnet—the first time Aave has expanded beyond EVM-compatible chains. Built using the Move programming language, Aptos offers high throughput and low fees, making it an attractive environment for DeFi innovation.
This deployment allows Aave to stress-test its protocol ahead of mainnet launch. With Aptos’ TVL growing from $100 million to $1.8 billion in 2024, and major stablecoins like USDC now supported, the ecosystem is maturing rapidly.
The integration marks a milestone in Aave’s multi-chain strategy and signals increasing diversification across non-EVM networks.
Emerging Trends: Hyperliquid’s Explosive Growth
Hyperliquid reported extraordinary growth in 2024 despite no external funding:
- Daily trading volume: Up 15x (from $1B to $15B)
- Open interest: Up 24x (from $178M to $4.3B)
- TVL: Up 37x (from $56M to $2.1B)
- Users: From 31,000 to 300,000
By redistributing all trading fees to users and launching key upgrades like HIP-1 and HyperBFT consensus, Hyperliquid has cultivated a loyal community and robust trading ecosystem—proving that user-centric models can drive organic growth in DeFi.
Frequently Asked Questions
Q: Why did Solana’s DEX volume surpass Ethereum’s despite lower TVL?
A: Solana’s faster transaction speeds and lower fees attract high-frequency traders and speculative activity. While Ethereum locks more capital in long-term DeFi positions, Solana sees higher turnover due to emerging AI-driven dApps and meme coin trading.
Q: Is the BTC ETF inflow sustainable?
A: Yes—ongoing inflows reflect institutional trust in Bitcoin as a macro hedge. However, sustainability depends on inflation trends, Fed policy, and broader risk appetite.
Q: What does Aave’s deployment on Aptos mean for DeFi?
A: It signals a shift toward multi-chain interoperability beyond EVM chains. As non-EVM ecosystems mature, protocols like Aave are expanding to tap into new user bases and technical advantages.
Q: How credible is Sol Strategies’ investment in Solana?
A: Very credible—its public filings confirm financial commitments. The move aligns with broader trends of institutions favoring high-performance blockchains with strong developer activity.
Q: Can Backpack succeed in Europe’s regulated crypto space?
A: It has strong potential given its regulatory licenses and focus on user restitution. Success will depend on execution speed and product differentiation under MiCA rules.
Q: Are meme coins like $MLG viable long-term investments?
A: Generally not—they’re highly speculative. While social momentum can drive short-term gains, fundamentals are often lacking. Investors should treat them as high-risk plays.
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