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 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.