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  • The Great AI Sell-Off Of 2025 — is it All Over or is the DeFAI Supercycle on the Horizon?

The Great AI Sell-Off Of 2025 — is it All Over or is the DeFAI Supercycle on the Horizon?

PLUS: Everything Happening in Arbitrum Right Now!

AuthorAuthorAuthorAuthor

0x_Vlad, CJ CJ, Francesco & MarketsAlpha
January 30, 2025 • Est. Reading Time: 16 minutes

GM. This is The Castle Chronicle—where we decode market chaos so you can focus on striking gold. AI tokens just hit turbulence, DeFi is back, and DeepSeek might’ve just kicked off a major shift in AI-crypto. Let's get into it.

Here’s what’s happening today:

  • 📈 Price Action – BTC holds momentum, but early signs of weakness are showing.

  • 🗳️ Arbitrum Corner – Stablecoins, AI, and rollups—Arbitrum’s ecosystem is heating up fast.

  • 🔍️ Market Watch – AI-crypto tumbles, DeFi rebounds, and massive token unlocks loom.

  • 🔑 Key News – Major headlines, whale trades, and the biggest shifts in crypto.

Whale GIF

🔍️ MARKET WATCH

Let’s Talk Market Drama

DeepSeek's breakthrough dominated headlines this week, triggering a significant Nvidia selloff and sparking intense debates around AI-crypto valuations. The market's telling a mixed story: while BTC and ETH show resilience (+2.88%, +2.16%), AI-related tokens are taking a hit, with the sector down 12.08%.

DeFi's staging a comeback though: AAVE and LINK surged (+47.89%, +24.65%), while HYPE leads Layer 1 gains at +45.49%. Gaming tokens are mostly in the red, but AR's massive 56.65% jump stands out against AGLD's 14.52% decline.

Delphi Sectors Map

Solana & AI tokens performance over a week

Deep Seek's breakthrough is sending waves through markets, while it rattled traditional tech stocks with a massive $787B wipeout this week.

Market data supports this: ETH and SOL volatility has increased amid the tech sector's turmoil, which could signal a potential shift in investor interest from centralized to decentralized AI infrastructure.

Major Token Unlocks Alert

A massive $790M worth of tokens are unlocking this week, with SUI leading at $256.14M (64.19M tokens, 2.13% supply increase) and SOL following at $111.12M (465,770 SOL, 0.10% supply impact). Optimism will unlock 31.34M tokens ($45.45M, 2.32% increase).

Looking at the price performance of $SUI after unlocks, 2024 was the best-performing year for SUI, even after those 1B-3B token unlocks.

Unlocks likely align with bullish trends, bullish announcements, and seasonality.

Notable smaller unlocks include WLD ($77.43M, 3.92% supply increase) and ZETA/AI, which despite lower dollar values, will see significant supply impacts of 6.98% and 14.01%, respectively.

Market Impact: While SOLs unlock is substantial in value, its minimal supply impact (0.10%) suggests limited pressure. SUI and smaller caps like ZETA/AI could see higher volatility due to larger relative supply changes.

TVL Movement Update

Chain activity shows impressive strength, with only four major networks seeing significant weekly declines: Hyperliquid, Zircuit, Blast, and Thorchain.

Looking at chains with established liquidity above $1M, here are the fastest-growing networks by TVL over the past month, according to DefiLlama data.

Protocols with the highest TVL growth over a week by Defilama

Onchain Movements

Wintermute holds over $160M worth of Solana $SOL tokens compared to no Solana holdings 2 months ago, likely for market-making services for new Solana launches and memecoins.

Meanwhile, Jump Trading holds $75M+ in ETH as its second-largest position and staked ETH $90M+ as its top holding.

Wintermute & Jump Trading: SOL, BTC, ETH Holdings

Wintermute Portfolio sorted by weekly inflows

Jump trading Portfolio Sorted by weekly inflows

Courtesy of @MarketsAlpha - Telegram channel for sharing crypto market research and Intel Alpha

💙 ARBITRUM ECOSYSTEM UPDATE

This week, Arbitrum Corner brings you the hottest updates from the ecosystem.

There is so much going on - but we’ve done the research so you don’t have to. Here’s our curated list for the week:

Real-world impact built on Arbitrum - with Eldorado

Eldorado is an app that allows users in LATAM to buy, sell, and transfer USDT p2p, based on Arbitrum. Stablecoins are one of the most underrated use cases in crypto. This is especially true in countries suffering from hyperinflation, where stablecoins represent the best alternative to safeguard their wealth when US dollars are unavailable.

This is why just a couple of days ago Eldorado ranked 1st in the Finance category in the Venezuelan App Store.

A small win for Arbitrum, a big win for thousands of Venezuelan people.

USDT upgrades to USDT0

USDT is made native and interoperable by having all USDT locked in a smart contract on Ethereum and an equivalent amount minted across all supported networks. Read the announcement here.

BoLD is Here

The conduit team just upgraded 120 (!!) orbit chains, getting ready for the BOLD launch.

For those not familiar with BOLD, here’s a quick introduction we did last week:

Say hello to Oceanum, the latest Arbitrum chain

Bluewhaleai just secured a $100 investment and is building Oceanium, an Orbit chain in collaboration with Caldera.

The scope of Oceanium is becoming an aggregation layer for the cross-chain AI agents and models. The idea behind this is that nowadays there exists several tools and models for AI agents, but they are fragmented and lack coordination.

For instance, two of the most important features of this Orbit will be the ability to deliver data contextualization and orchestration. As such, they compare the model to a RAG system.

If you are not familiar with a RAG, this is a good read, as we’ll keep hearing more and more on it: https://botpress.com/blog/rag-in-ai

RWA in 2024

The RWA sector was definitely one of the best-performing verticals from 2024. The Arbitrum DAO managed to bootstrap a TVL of over $100 from 0, in just over a year.

The objective for this year is to double down on this. Just a few days ago, Spiko_finance launched their tokenized T-bills on Arbitrum:

Here’s another example of Estate Protocol tokenizing real estate properties in Dubai:

Arbitrum is experiencing increased AI activity

Several projects were awarded from the Trailblazer program, including:

Given the well-developed DeFi ecosystem, it only makes sense that Arbitrum is seeing the emergence of a florid sector of DeFAI agents:

Camelot received an investment from Offchain Labs

And they launched their v-4 upgrade: https://x.com/CamelotDEX/status/1883992212729680280

This new upgrade introduces a plugin where anyone can leverage features such as:

  • Limit orders

  • TWAP oracles

  • JIT liquidity

  • Gas discounts

  • Perpetual & leverage trading

V4 also allows anyone to create customized liquidity pools.

Camelot is an integral part of the Arbitrum ecosystem and this development will hopefully continue strengthening its ecosystem and involvement across Arbitrum One and Orbits.

Courtesy of Francesco - Core at Castle Labs

📈 PRICE ACTION

Gm frens!

Looking at the weekly chart BTC is still holding up its momentum cycle while going sideways somewhat. The expectation therefore remains bullish.

  • Healthy uptrend

  • Active momentum cycle

That being said, I’m seeing first signs of loss of momentum on the lower timeframes. When we zoom into the current sideways price action we can clearly see that the range high was liquidated without immediate continuation.

When that happens, usually price will seek liquidity on the opposite side. The nearest liquidity point has already been taken, therefore I would expect price to continue making a run for new ATHs.

  • Sideways price action

  • Range high liquidated

  • Nearest low liquidated

However, if price continues going lower from here I’d expect it to seek liquidity much deeper and potentially lose its weekly momentum cycle. But that’s still very far from here.

For now, we should stick to our HTF direction which is clearly bullish. This is just the first sign of momentum loss which on its own, doesn’t mean much.

Trade responsibly and I’ll see y’all next time!

Not following what I’m talking about? Check out my quick cheatsheet to briefly explain how I approach a chart.

Courtesy of 0x_Vlad - trend-based trader and MentFX student

🔑 KEY NEWS

MAJOR HEADLINES

PROJECT UPDATES

GOOD READS

NEW PROJECTS

Courtesy of CJ - check out his telegram channel for daily news, project updates and new releases

That’s a wrap for this week! Stay sharp, stay liquid, and don’t let the unlocks catch you off guard. Until next time—keep stacking, keep scheming.

Its Friday GIF by Kudaberi

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.

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