Blockchain Market Analysis for February 2025: Coexistence of Adjustment and Innovation

In February 2025, the blockchain market experienced significant adjustments, posing challenges to major public chains. Bitcoin performed relatively steadily, while other mainstream public chains generally declined. Nevertheless, the pace of innovation in the public chain sector has not stalled, and several important projects have made progress.

Market Overview

In February, the market experienced a significant correction, with Bitcoin falling from $98,768 to $84,177, a decline of 14.8%; Ethereum saw a larger drop, falling from $3,065 to $2,216, a decrease of 27.7%. In the last week of the month, security concerns intensified the selling pressure.

This pullback follows the bull market in January, but the market signals are complex. Investors are wavering between optimism and concerns raised by safety hazards. Market sentiment is deteriorating, and risk appetite is declining, especially in speculative areas. The North American market is cautiously optimistic due to policy changes, while the Asia-Pacific market is feeling the impact of hacking attacks more intensely.

Regulatory and Policy Changes

The Trump administration's cryptocurrency executive order focuses on self-custody and the development of stablecoins, providing clarity of policy for the industry. However, a major hacking incident on February 21 resulted in losses of up to $1.5 billion, setting a record for the largest loss in cryptocurrency history, raising new security concerns, and causing a rapid shift in market sentiment.

At the same time, the SEC's attitude has softened, pausing investigations into several major cryptocurrency companies and dropping its appeal on the "dealer rule." The bipartisan GENIUS Act further strengthens the regulatory framework for stablecoins, demonstrating a friendly trend in the U.S. regulatory environment.

Investor behavior reflects this turmoil. The Memecoin frenzy driven by Argentine President Milei's related tokens has quickly cooled due to negative news, with valuations plummeting and trading volumes shrinking significantly. This shift suggests that the market is retreating from high-risk assets.

Layer 1 Public Chain Performance

Layer 1 public chains are generally under pressure, with a total market value decline of 20.8% to $2.3 trillion. Bitcoin's dominance increased from 71.3% to 74.2%, while Ethereum's share shrank from 14.0% to 11.9%. The share of a certain chain slightly rose to 3.7%, but after a price drop of 36.3%, the share of a certain public chain fell from 4.0% to 3.3%.

Litecoin is rising against the trend, up 1.0% to $128.7, while certain public chains are lagging behind, with declines exceeding 35%.

The total locked value in DeFi ( TVL ) decreased by 20.0% to 82.9 billion USD, with Ethereum at 44.9 billion USD (down 21.7%) and a certain public chain at 8.6 billion USD (down 34.1%).

Berachain has emerged rapidly, jumping to sixth place after the mainnet launch on February 6, with a TVL of $3.2 billion. The chain issued 80 million BERA tokens and employs a "liquidity proof" model—an innovative staking method that transforms liquidity into network security. Following a $100 million financing in 2024, this month's airdrop and governance rights have stimulated market enthusiasm.

The Memecoin craze of a certain public blockchain has clearly cooled down. High-profile failure cases have damaged market confidence, leading to a significant decline in trading volume on multiple DEX platforms. Although Memecoins will not disappear, their peak frenzy may have passed, and traders are beginning to focus more on fundamentals rather than speculation.

Bitcoin Layer 2 and Sidechains

The TVL of Bitcoin L2 and sidechains decreased by 24.5% from $2.7 billion to $2.1 billion. Core leads with a TVL of $460 million (a decline of 42.0%), followed by Bitlayer ($350 million) and BSquared ($320 million). BOB performed well, only dropping 7.9% to $220 million.

In medium-sized platforms, Merlin performed relatively well, with TVL slightly decreasing by 9.3% to $150 million. Small platforms, on the other hand, faced greater pressure, with multiple projects experiencing a decline of over 27%.

Industry experts predict that as initial enthusiasm wanes, more than two-thirds of existing Bitcoin Layer 2 projects will disappear within three years. The industry downturn in February suggests that consolidation may have already begun. Looking ahead, platforms that can demonstrate actual utility may prove to be more resilient than projects that rely solely on momentum.

Ethereum Layer 2 Development

Ethereum L2 TVL fell 23.4% to $14 billion. Arbitrum maintains its leading position with a TVL of $4.5 billion (down 33.4%), while a certain platform climbed to second place with a TVL of $4.2 billion (down 10.6%), pushing Optimism ($2.1 billion) to third. A certain zkEVM surged 104.1% to $300 million, becoming a rare highlight this month.

A certain platform has launched Flashblocks (faster transaction confirmations), Appchains (customized L3), and smart wallet sub-accounts, aimed at maintaining user stickiness. Unichain's mainnet launched on February 16, having previously processed 95 million transactions on its testnet, positioning itself as a game changer in scalability performance, with several heavyweight institutions joining. Starknet's Nums application chain, as a Layer 3 gaming innovation, showcases the future of modular design.

Meanwhile, Sonic EVM, as the first SVM chain extension of a certain public blockchain, went live on the Mobius mainnet on February 27, attracting a lot of attention. It achieved 10,000 TPS and brought $47.6 million in funding to a certain DeFi protocol within a few days. These initiatives indicate that Layer 2 projects are investing more in technology rather than just hype.

The founder of Ethereum commented on February 19, emphasizing that Ethereum needs to clearly define its position amid increasing competition. He advocated for Layer 2 to take a leading role in scalability and interoperability, pointing out that they have evolved from "advanced multi-signatures" into powerful networks. He called for a focus on real value rather than speculative bubbles.

Financing Situation

Financing activities have slowed down, with a total of 6 transactions completed in February, amounting to $32.4 million. Mango Network raised $13.5 million for its EVM-MoveVM hybrid chain, planning to launch in the first quarter of 2025. Fluent Labs secured $8 million in funding to develop a multi-virtual machine Layer 2 that connects Ethereum and a certain public chain.