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 showing a trend of divergence. Under the dual influence 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 showed a weak performance, with its price dropping from $3,353 to $3,292, a decline of 1.8%, and the ETH/BTC ratio hit a nearly 4-month low.

This month's multiple important policy developments have had a significant impact on the crypto market. The executive order on cryptocurrency regulation issued by the U.S. government provides clear guidance for the industry, particularly emphasizing the protection of self-custody rights and supporting the development of stablecoins. However, remarks 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 launch of politically related tokens on Solana has triggered significant fluctuations in the Memecoin sector, diverting market attention and funds from other crypto 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, and AI-related tokens have seen an increase this month.

Layer 1 Performance

In January 2025, the total market value of blockchain rose by 7.2% to $2.8 trillion. Bitcoin's market dominance further increased to 71.3%, while Ethereum's share decreased to 14.0%. Solana surpassed a well-known exchange's public chain with a 4.0% market share (3.4%). Other public chains collectively accounted for 7.4% of the market share.

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

Among emerging platforms, Sui maintains a stable market value in a competitive environment. Although TON's market value has decreased by 14.0%, it still holds a position in the top ten. Hedera shows good growth with a market value increase of 14.2%.

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 Sidechain Development

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

Core maintains its market leadership with a TVL of $660 million, despite a 9.3% drop from last month, it still holds a 25.3% market share. Bitlayer shows strong growth, with TVL increasing by 15.2% to $430 million, while BSquared performs excellently, with TVL soaring by 19.7% to $400 million.

Rootstock and BOB ranked fourth and fifth with TVL of $250 million and $240 million, respectively. It is worth noting that AILayer's TVL grew by 13.2% to $230 million.

On medium-sized platforms, Merlin's TVL experienced a mild decline of 3.7%, while Stacks maintained stable growth, increasing by 4.0%. 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 ecosystem

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

A well-known Layer 2 platform, despite a significant drop of 20.4% compared to last month, 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 third with a TVL of $3 billion, with only a slight decrease of 0.5%.

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

Some mature platforms are facing challenges, with Blast TVL dropping 33.8% and Fuel dropping 47.3%. 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.