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

In January 2025, the total market capitalization of the crypto market increased by 7.2% to reach $2.8 trillion, with major blockchain platforms showing divergent performances. Under the dual influence of new regulatory policies and breakthroughs in artificial intelligence technology, Bitcoin further solidified its market dominance, with its share rising to 71.3%.

Market Overview

The price of Bitcoin rose from $94,577 to $102,180, an increase of 8.0%. Meanwhile, Ethereum showed weakness, with its price dropping from $3,353 to $3,292, a decline of 1.8%, and the ETH/BTC ratio reached a nearly 4-month low.

Multiple important policy developments have had a significant impact on the crypto market. The new government's executive order on cryptocurrency regulation provides clear guidance for the industry, particularly emphasizing the protection of self-custody rights and supporting the development of stablecoins. However, remarks made at the end of the month regarding international trade tariffs have raised concerns about global economic growth, leading to a cooling of market sentiment.

A politician's family has launched a token on Solana, which has caused significant volatility in the Memecoin sector. This wave of speculation has diverted market attention and funds from other crypto sectors, including the blockchain gaming field.

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

Layer 1 Public Chain Development

In January 2025, the total market capitalization of blockchain increased by 7.2% to $2.8 trillion, with Bitcoin's market dominance further rising to 71.3%. Ethereum's share continued to decline to 14.0%, while Solana surpassed a certain chain (3.4%) again with a market share of 4.0%. Other public chains collectively accounted for 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 capitalization, Stellar has stood out with a significant increase in market cap to $12.6 billion, while Litecoin and Monero rose by 23.5% and 21.6% respectively. Cardano's market cap grew 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 maintains 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 declines ranging from 3.7% to 7.5%.

Bitcoin Layer 2 and Sidechains

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

Core maintains market leadership with a TVL of $660 million, despite a 9.3% drop from December, still holding 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 performed excellently, with a TVL surge of 19.7% to $400 million (market share 15.3%).

Rootstock and BOB ranked fourth and fifth with TVLs 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 gently declined by 3.7% to $170 million, while Stacks maintained steady growth, rising by 4.0% to $120 million. The performance of small platforms varied, with BounceBit increasing 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 TVL increasing by 14.0% to $4.6 billion, solidifying its second position. Optimism holds steady 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%, reaching a TVL of $900 million and $610 million, respectively.

Some mature platforms are facing challenges, with Blast TVL dropping 33.8% to $400 million, and Fuel down 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 showing varying degrees of success. As new entrants join the ecosystem, mature platforms focus on consolidating their market position by enhancing functionality and user experience.