January 2025 Crypto Market Review: Bitcoin's Dominance Strengthens, Layer 2 Ecosystem Continues to Evolve

In January 2025, the total market capitalization of the crypto market increased by 7.2% to $2.8 trillion, with major blockchain platforms performing unevenly. Under the dual impact of new regulatory policies and breakthroughs in artificial intelligence technology, Bitcoin further solidified its market dominance, accounting for 71.3%.

Market Overview

The price of Bitcoin rose from $94,577 to $102,180, an increase of 8.0%. In contrast, Ethereum performed poorly, dropping from $3,353 to $3,292, a decrease of 1.8%, with the ETH/BTC ratio hitting a nearly four-month low.

The development at the policy level has had a significant impact on the crypto market. The new government's regulatory directives on cryptocurrencies provide clear guidance for the industry, particularly emphasizing the protection of self-custody rights and support for the development of stablecoins. However, comments at the end of the month regarding international trade tariffs have raised concerns about global economic growth, leading to a cooling of market sentiment.

The token launched by a certain political figure's family on Solana has triggered significant fluctuations in the Memecoin sector, diverting market attention and funds away from other encryption sectors, including the blockchain gaming field.

Breakthrough advancements in the field of artificial intelligence have also influenced market dynamics, accelerating the focus on decentralized AI infrastructure within the crypto ecosystem, with related tokens experiencing an increase this month.

Layer 1 ecosystem

In January 2025, the total market capitalization of blockchain rose by 7.2% to $2.8 trillion, with Bitcoin's market dominance further increasing to 71.3%. Ethereum's share continued to decline to 14.0%, while Solana surpassed a certain trading platform chain with a market share of 4.0% (3.4%). Other public chains collectively held 7.4% of the market share.

Solana continues to perform strongly, with a market cap increase of 22.0% to $112.3 billion, solidifying its position as the third largest blockchain by market cap. Among the top 20 chains by market cap, Stellar stands out with a significant increase to $12.6 billion, while Litecoin and Monero rose by 23.5% and 21.6%, respectively. Cardano's market cap increased by 11.9% to $33.2 billion.

Emerging platforms maintain their development momentum, with Sui's market capitalization stabilizing at $12.4 billion in a competitive environment. Although TON's market capitalization dropped by 14.0% to $12 billion, it still retains its position in the top ten. Hedera has shown good growth, with its market capitalization increasing by 14.2% to $11.7 billion.

Traditional Layer 1 platforms such as Polkadot, Near, and Aptos are under pressure, with market capitalization decreasing between 3.7% and 7.5%.

Bitcoin Layer 2 and Sidechains

In January 2025, Bitcoin Layer 2 and sidechains maintained a growth momentum, with the total locked value reaching 2.6 billion USD, an increase of 5.2% compared to December.

Core maintains its market leadership with a TVL of $660 million, despite a 9.3% drop from December, still accounting for 25.3% of the market share. Bitlayer shows strong growth, with a TVL increase of 15.2% to $430 million (market share 16.8%), while BSquared performs exceptionally well, with a TVL surge of 19.7% to $400 million (market share 15.3%).

Rootstock and BOB rank fourth and fifth with a TVL of $250 million and $240 million, respectively, with growth rates of 10.8% and 8.9%. Notably, AILayer's TVL grew by 13.2% to $230 million.

On medium-sized platforms, Merlin TVL saw a mild decline of 3.7% to $170 million, while Stacks maintained steady growth, rising 4.0% to $120 million. Small platforms showed mixed results, with BounceBit growing by 7.3%, while newcomers like SatoshiVM and Naka fell by 11.6% and 14.9%, respectively.

Ethereum Layer 2

In January 2025, the Ethereum Layer 2 ecosystem underwent significant changes, with the total locked value dropping to $18.3 billion, a decrease of 6.7% compared to December. The performance of market leaders showed divergence.

Despite a significant drop of 20.4% in December, a certain Layer 2 platform maintains its leading position with a TVL of $6.8 billion. Base continues its strong momentum, with a TVL increase of 14.0% to $4.6 billion, solidifying its second position. Optimism remains in third place with a TVL of $3 billion, only slightly down by 0.5%.

Among the best-performing platforms, World Chain excelled with a TVL increase of 27.6% to $350 million, while Paradex surged by 50.3% to $37.2 million. ZK Rollups demonstrated resilience, with Starknet and zkSync Era growing by 7.4% and 12.2%, respectively, reaching a TVL of $900 million and $610 million.

Some mature platforms are facing challenges, with Blast TVL dropping by 33.8% to $400 million, and Fuel decreasing by 47.3% to $110 million. Linea and Scroll also fell by 5.7% and 5.2%, respectively.

The competitive dynamics of the ecosystem continue to evolve, with Optimistic Rollup and ZK Rollup demonstrating varying degrees of success. As new entrants join the ecosystem, mature platforms focus on consolidating their market position by enhancing functionality and user experience.