Crypto Alpha Report - December 27, 2024

Friday Alpha Report
2024 12 27

Opening Bell:

As I reflect on this year, and the upcoming year to come, I ask myself the same question many likely are.

“Are we really going to get alt season?”
“Should I really be all-in on alts right now?”
“What if this is the top?”

Specifically with altcoins, I find it’s very helpful to reflect on MARKETCAP, instead of price, as that is the #1 metric IMHO for evaluating how much farther a token can go, and at what levels price taking should occur.

Here are some market caps we reached during the previous bull market:

Cardano (ADA) - 95B (now: 30.8B)
Dogecoin (DOGE) - 88.7B (now: 46.3B)
Solana (SOL) - 77B (now: 94.5B)
Polkadot (DOT) - 56B (now: 10.6B)
Shiba Inu (SHIB) - 41.1B (now: 13.4B)
Terra (LUNA) - 41B (now: 307M)
Avalanche (AVAX) - 30B (now: 15.9B)
Cronos (CRO) - 22.7B (now: 44B)
Uniswap (UNI) - 22.5B (now: 8.3B)
Chainlink (LINK) - 22B (now: 15.4B)
Polygon (MATIC) - 19.7B (now: 44B)
Axie Infinity (AXS) - 10.4B (now: 11B)
FTX Token (FTT) - 99B (now: $0)
Sandbox (SAND) - 6.8B (now: 1.3B)

These were some of the best-performing coins of the 2020/2021 Bull Market Cycle, with some only reaching their peak market caps in early 2022.

When I look at the current Marketcaps of Crypto today, only the top 11 coins have a market cap over 20B.

Looking back at the 2020/2021 cycle, the top narratives (categories of crypto) were:

Layer 1 Blockchains (Why? Serious need for scaling solutions and cheaper alternatives to ETH)
Layer 1 Blockchains reached market cap highs of $50-90B.

DeFi (Why? Shiny new thing, hype around yield and “safer” way to earn in crypto)
DeFi projects reached market cap highs of $10-20B.

Memecoins (Why? GME/AMC “stick it to the man” movement)
Memecoin projects reached market cap highs of $5-10B with DOGE & SHIB outliers reaching 40-80B.

NFTs & Metaverse (Why? “Mainstream” adoption of digital art/gaming items, hype around metaverse with major brands entering the space)
NFT & Meraverse tokens reached marketcap highs of $5-15B.

Exchange Tokens (Why? Benefits like trading fees/rewards/token burns, increased trading volume during bull market)
Exchange tokens reached marketcap highs of $5-10B.

Well, what are the current narratives poised to erupt in 2025? This is where we enter the realm of speculation, but I would bet the following categories are likely to experience further growth:

AI Agents (current combined MC of 12B, top project MC of 3.5B)
Meme (current combined MC of 105B, top project MC of 46B)
Infrastructure (current combined MC of 45B, top project MC of 13.9B)
DePIN (current combined MC of 32B, top project MC of 3.6B)
Gaming (current combined MC of 24B, top project MC of 2.4B)
Zero Knowledge (current combined MC of GETTEX:13B, top project MC of 2.4B)
Real World Assets (current combined MC of 19B, top project MC of 3.5B)

As you can see, if we see anything like the growth we saw in the 2020/2021 cycle - we are a long ways away from bull market highs, and these sectors have a lot of room to grow. Of course, the challenge as always is conviction. It’s really not timing, for those with a longer time horizon. Often, hyper focusing on the timing just leaves you sidelined. Focus instead on the quality, your conviction, and your targets.