NEAR Protocol: A Look at Recent Developments and Future Outlook
Introduction
NEAR Protocol has shown significant growth in decentralized finance (DeFi) over the past year. This article examines the protocol’s recent performance, price fluctuations, and what investors can expect moving into the first quarter of 2025.
Significant Growth in DeFi
Record Growth: NEAR Protocol experienced a remarkable 156% increase in network growth last year, largely driven by positive market sentiment following the U.S. elections in November.
Total Value Locked (TVL): According to a report by Messari, the total value locked in NEAR’s DeFi ecosystem was below $100 million at the end of the third quarter of 2024. However, this value surged to $240 million by the end of the last quarter, indicating rising investor interest and confidence in the platform.
- Price Fluctuations: Despite this growth in DeFi, the total value locked showed some slowdown in the last quarter, similar to NEAR’s mixed price performance over the same period.
Price Performance Overview
Early 2024 Gains: The price of NEAR jumped by 160% in the first half of 2024, but like many other cryptocurrencies, it faced a significant drop last summer. The price began to recover after the U.S. elections, posting an impressive 72% increase.
- December Decline: Unfortunately, a sell-off in December erased all post-election gains, causing NEAR’s price to plummet to a low of $3, reflecting a massive 60% drop.
What Lies Ahead for Q1 2025?
Impact of AI Industry Fluctuations: The early 2025 losses for NEAR could be connected to a decline in the AI market, particularly following the launch of competing AI services, such as the relatively affordable DeepSeek chatbot from China.
- Correlation with Daily Activity: Like many blockchain projects, NEAR’s price has shown a strong correlation with the number of daily active users and decentralized exchange (DEX) trading volumes. In previous market rallies, both metrics increased significantly but had a downward trend during market corrections.
Current Situation and Future Predictions
Declining Activity Metrics: NEAR’s fall from $8 to $3 was accompanied by a sustained decrease in both daily active users and DEX trading volumes. As of now, these indicators are still not showing a strong recovery, which could keep the price of NEAR subdued.
Potential Bottoming-Out: It’s important to note that according to analysis on weekly charts, NEAR may have reached a bottom around the $3 mark. Historical data also shows that NEAR rebounded at this price level in March, August, and November of 2024. If this trend continues, NEAR could target a recovery to around $4.7 or even $5.
- Risk of Further Decline: If NEAR falls below its current support level of $3, it could drop to as low as $2, which would be concerning for investors.
Conclusion
NEAR Protocol has demonstrated impressive growth in the DeFi space and shows promise for recovery in the coming months. However, market volatility and fluctuations in the AI sector could influence its price and overall performance. Investors should remain vigilant and monitor key indicators such as daily active users and trading volumes as they assess NEAR’s future trajectory.
Looking Ahead
With the ever-changing landscape of the crypto market, it’s essential for investors to keep track of both macroeconomic trends and specific developments within NEAR Protocol to make informed investment decisions.
