KuCoin Ventures Weekly Report: Navigating Market Volatility; Spotlight on AI Integration and Niche Bitcoin Applications

 

Last week, the entire crypto market experienced significant volatility driven by news regarding tariffs, turmoil in external financial markets, and shifts in internal market liquidity. Looking at specific sentiment indicators, the CMC Fear & Greed Index once dropped to 15, its lowest point in the past two years. In contrast, the BTC Fear & Greed Index remained relatively resilient, reaching a low of 18 before quickly rebounding to 45 in the subsequent days. Ethereum Dominance slid to 7.2% at one point, its lowest level since March 2017, falling even below the bear market low of September 2019. This not only reflects Ethereum's own sluggish performance but also presents a significant challenge to the narratives of numerous altcoins led by Ethereum.

 

USDT issuance initially declined and only reversed course after the market rebounded following the easing of the tariff crisis on April 10th. However, from a longer-term perspective, the growth rate of USDT has markedly slowed. Similarly, after peaking above $60.94B on April 4th, USDC issuance has also begun to show signs of weakening. The slowing growth rate, and even the onset of negative growth, in the total issuance of the market's two core stablecoins indicates that support from new liquidity for the entire market is facing challenges.

 

Although the crypto market has recently seen a pullback, a key macro backdrop is that net US dollar liquidity has actually been increasing since January 2025. This liquidity growth does not stem from the Federal Reserve, which is still conducting quantitative tightening (QT). Instead, it is primarily driven by accelerated outflows from the US Treasury General Account (TGA) (a trend particularly evident since February 10th). Another key factor, the Reverse Repo Program (RRP) account, has fluctuated at low levels during this period. While this may run counter to the sentiment of most crypto market participants, objectively, the overall financial markets have indeed benefited from the easing environment created by US Treasury operations since the beginning of the year.

 

However, caution is warranted as this liquidity tailwind may not be sustainable. The US Treasury Secretary estimates that the government's fiscal space ("maneuvering room") could be exhausted as early as May-June, at which point the debt ceiling issue will require urgent resolution. Last week, the Senate passed a new budget framework, paving the way for measures such as raising the debt ceiling by $5 trillion. We need to monitor the situation closely: once a new US debt ceiling deal is reached (expected around May-June), the Treasury is likely to issue debt on a large scale. This could bring an end to the current liquidity release driven by the TGA drawdown, potentially leading the market into a phase of tightening liquidity. Such a development would pose a potential headwind for risk asset markets, including crypto.

 

 

The project "Meanwhile" announced the completion of a $40 million financing round last week, securing the largest single funding deal of the week despite operating in a relatively niche sector. The company accepts Bitcoin for whole life insurance policy premiums, uses BTC as the underlying asset for these policies, and subsequently offers low-interest policy loans (allowing withdrawal of up to 90% of the cash value after 2 years) and pays out claims, also in Bitcoin. The project has previously received investment from Sam Altman and Google's AI-focused fund, Gradient Ventures.

 

The uniqueness of Meanwhile's model lies in its avoidance of crowded BTC sectors like Staking, Layer 2, and Payments. Instead, it focuses on addressing specific pain points for HNWIs and family offices who are long-term BTC holders. These pain points include managing asset appreciation taxes, simplifying inheritance processes, avoiding capital gains and estate taxes, and mitigating risks associated with private key management. By utilizing compliant insurance products, Meanwhile leverages BTC as both a payment method and an underlying asset, cleverly employing policy features to facilitate tax planning and straightforward inheritance. As the application scenarios for BTC continue to expand, we anticipate the emergence of more innovations that integrate with real-world needs. We believe that sectors and applications demonstrating such unique perspectives and addressing genuine demand warrant continued attention.

AI is rapidly merging with blockchain technology, creating new paradigms in the DeFi and SocialFi sectors. Recently, Wayfinder and Subs.fun have drawn industry attention to their innovations in simplifying on-chain interactions and exploring tokenized community governance, though both also face notable challenges.

 

 

Wayfinder, a leading DeFAI (DeFi + AI) project, introduces an innovative AI agent called "Shell," enabling users to effortlessly perform complex blockchain tasks—such as cross-chain transactions and smart contract deployment—using simple natural language commands, significantly lowering barriers to DeFi participation. This interaction model validates the investment thesis that "AI agents can drive large-scale growth of on-chain users." Compared to competitors like Moralis AI and Furya, Wayfinder demonstrates clear advantages: Moralis mainly provides backend solutions, while Furya remains at the conceptual stage. In contrast, Wayfinder has already achieved a closed-loop application in its testing phase, creating a positive feedback loop—more users lead to smarter AI agents, resulting in improved user experiences.

 

In just a few months, Wayfinder has attracted significant market attention, with its $PROMPT token quickly listing on multiple centralized exchanges, briefly achieving a circulating market cap of over $100 million and an FDV nearing $500 million. This surge in interest partly validates our earlier investment hypothesis—that AI agents simplifying blockchain complexity can potentially unlock substantial user growth and value creation. However, it's important to note that this high valuation largely reflects market enthusiasm for the narrative. The true metrics of user retention and transaction volume growth still await further validation from actual user data. In other words, while the concept of "AI simplifying the DeFi user interface" has received initial backing from capital markets and communities, Wayfinder’s ultimate success depends on effectively addressing challenges in security, performance, and user education over the long term.

 

 

Subs.fun is exploring new territory within SocialFi, combining tokenized subforums with AI-driven content governance and community incentives. This experiment initially supported the hypothesis that AI plus tokenization can enhance community engagement. However, recent sharp price declines following two consecutive token launches within Subs.fun’s communities have highlighted significant governance and speculation risks. Such governance errors can rapidly erode trust and dismantle the community’s accumulated loyalty. For SocialFi projects to escape the pitfalls of speculative short-termism, more robust governance and incentive balances are required—leveraging tokens to stimulate participation and creativity while preventing mechanisms that might harm sustainable growth.

 

Together, Wayfinder and Subs.fun illustrate how integrating AI into DeFi and social sectors can reshape user engagement—one by significantly reducing interaction barriers through AI agents, and the other through innovative tokenized community governance models. Nonetheless, the AI+Crypto space remains at an early experimental stage, marked by rapid iteration. While inspired by emerging creativity, we must remain cautious and continue monitoring the fundamental hypotheses driving these innovations.

 

KuCoin Ventures, is the leading investment arm of KuCoin Exchange, which is a top 5 crypto exchange globally. Aiming to invest in the most disruptive crypto and blockchain projects of the Web 3.0 era, KuCoin Ventures supports crypto and Web 3.0 builders both financially and strategically with deep insights and global resources.
As a community-friendly and research-driven investor, KuCoin Ventures works closely with portfolio projects throughout the entire life cycle, with a focus on Web3.0 infrastructures, AI, Consumer App, Defi and PayFi.