Crypto Assets - A Four Year Cycle, Continued

Let us start with the end in mind; to quote Michael Saylor, "how many chairs are you sitting on"?

Since our last post in April, we have seen incredible buoyancy among crypto assets. I am personally still planning to begin taking off risk exposure between 365 and 500 days post halving (April - September 2025). Until then I remain 100% allocated, and about 75% of that allocation is to BTC.

For reference here is the BTC halving chart from that last post in April:

And here is the same chart from December 15 (h/t to @thescalpingpro):

Bitcoin is the best risk asset in the market

Every time Bitcoin breaks round numbers at new all time highs there are a couple things we know for certain: onchain activity is going to go bonkers (memes and real projects), TradFi and TradFi Media are going to cope hard, and eventually the liquidity from BTC will spill over to the “altcoins”.

One thing that has been different this cycle compared to past is that there is a true dispersion amongst which altcoins see the inflows. In past cycles there were 10-15 (2017) or ~100 (2021) altcoins that could truly benefit from the liquidity cascade. In our current market there are several hundred of “legit” altcoins and many thousand shitcoins (technical term) created each day through platforms like pump.fun (and while pump fun was created on Solana, each chain now has it’s own version, see: Gu Factory (Arbitrum), Hop Fun (Sui), ad infinitum).

So, picking Beta winners to Bitcoin is as hard as ever. One (somewhat) reliable method of finding these winners is to use ratio charts and zoom out… compare the monthly or weekly charts of ETHBTC, SOLBTC, SUIBTC. The market votes every day, and it is sending us a message. For those unwilling (or, if honest with ourselves, unable) to do the work and find the outperformers, holding Bitcoin will still outperform all traditional risk exposure.

ALT SZN

With all of that said as a healthy disclaimer, I believe we are entering ALT SZN, or as Raoul Pal coined it “The Banana Zone”.

Shitcoins are going bananas. While TradFi is focused on Fartcoin (a meme coin created by Truth Terminal) surpassing $1BN in market cap, crypto degens are running up many vaporware tokens — see Unicorn Fart Dust, the rise and fall of FWOG (from $50m to $750m market cap in about 6 weeks), POPCAT which ran to nearly $2BN before pulling back.

Everyone wants to be the next Bonk Guy, but the reality is picking winners in vaporland is hard and holding them is harder. Or to spin my favorite Ronnie Coleman quote “everyone wants to be a meme-millionaire, but no one wants to hold through 80% drawdowns”.

For myself I have found that it is much easier to have consistent conviction when holding Layer 1 tokens or legitimate projects on my favorite Layer 1s. I have provided some examples below, these are not ordered by conviction or position size.

• Solana (SOL): all the degenerate activities we briefly discussed above are happening on Solana. There is some action on Base (see: Virtuals and several derivative meme coins), but all the “metas” have originated on Solana - crypto AI “agents” (they are just twitter bots right now), meme coin lunacy (Bonk → WIF → POPCAT → FWOG → Fartcoin) leading to pump fun. Solana has flipped ETH on nearly every onchain activity metric. This is a clear consensus bet for the cycle and has been for some time. I typically use JUP, JTO, or some combination thereof to try and achieve Beta to SOL… sometimes this works (up markets), sometimes it does not (sideways/down markets). Both JUP and JTO were added to the Grayscale Top 20 for 1Q25, which is linked below.

• Zeus Protocol (ZEUS): bringing permissionless, native Bitcoin to Solana. On December 13th, ZEUS successfully validated the first Bitcoin transactions on Solana using its infrastructure. I like ZEUS as potential Beta to both BTC and SOL. After a successful launch on Jupiter’s LFG platform, the asset underwent a period of deep consolidation, similar to the “Institutional Underwriting” period presented by the book, “The Lifecycle Trade”. Using the method presented by this book, the chart would be annotated as follows, and we are looking for a sustained break above ~$1 with ($20m+ of daily volume) to confirm institutional appetite and enter the “Institutional Advance Phase”.

  

• Solana AI Coins - it is early for AI coins and admittedly these agents, do not have much agency at this point. But this is crypto… so don’t get too caught up on things like “fundamentals”… Outside of the agent thesis/meta, my bet for “ai infrastructure” is GRASS. I farmed the airdrop and am consistently impressed by the amount of data this team is aggregating. Additionally, Grayscale just named GRASS into their Top 20 plays of 1Q25.

  

  too early to annotate with the Lifecycle Trade framework, but potential W forming here

  Outsourcing some of my intellectual thinking on agents to the below chart from Messari since the holidays + a 9 month old have sapped a lot of my brain bandwidth. I find that most of the time the best way to play these brand new narratives is to bid the leader, and maybe the “number 2” coin/issue. An easy way to identify the leader is via market cap. In this case, I am looking at ai16z (Eliza) and zerebro (ZerePy).

  

• SUI - fast, horizontally scalable Layer 1 using the Movement coding language. This is the revival of Meta’s Libra/Diem project which was forcibly shut down by government regulation. Movement language brings object-oriented code to the blockchain - this is a big deal. I would not consider this a consensus bet, yet, but it is getting close. Using the same framework as above for Zeus, we see that SUI has already broken through it’s “Turbulence Zone” and is in the “Institutional Advance Phase”. I made a considerable purchase of this asset in the $0.77 to $1 range and have been adding on pullbacks, most recently in early December around $3.70. This has grown into my single largest, non-BTC position.

  

Thanks for reading!

I will be back soon.

Max