Welcome to another Crypto Weekly Digest brought to you by VirtualBacon.
This week, we dive into crafting the ideal crypto portfolio for the exciting year ahead - 2024. As we stand at the brink of a potential bull market, it's crucial to strategically position ourselves for what might be the last cycle where retail investors like us can achieve generational wealth in crypto. This is the golden window before big institutions potentially dominate the industry. In this edition, we'll explore top crypto projects poised for success in the upcoming bull run. I’ll share insights on why these altcoins stand out and disclose my own investment distribution among them.
I believe 2024 will be a pivotal year for crypto investors, fueled by three major catalyst events: the likely approval of the Bitcoin spot ETF in January, the Bitcoin halving event in April, and the potential shift in the FED’s monetary policy by late 2024. These events could stimulate risk-on assets, including crypto, similar to the surge in 2021.
Our focus will not just be on popular altcoins but also on hidden gems with potential to rise in the new cycle. The criteria for our selection includes narrative potential, team motivation, market leadership, and a possibility of at least a 10x return.
In this year's portfolio, Bitcoin is a foundational pick, holding a significant 25% share. This choice reflects a strategy prioritizing stability and growth potential. With a projected 5.5x increase, targeting a $200k value per Bitcoin, it represents a reliable, if not explosive, growth trajectory. Recognizing Bitcoin's market influence, its performance is pivotal for broader crypto trends. Thus, investing in Bitcoin means tapping into the crypto industry's gradual expansion.
Ethereum, commanding another 25% of my portfolio, transcends the typical altcoin category. It's similar to digital oil, complementing Bitcoin's digital gold. This analogy reflects Ethereum's unique utility and growing institutional recognition. Its classification as a commodity in key legal cases underlines its long-term viability and attractiveness to major institutions. Consistently holding 15-20% market dominance, Ethereum's influence is undeniable. Its potential spot ETF, backed by giants like BlackRock and Fidelity, mirrors Bitcoin's institutional allure. My portfolio's balance of Bitcoin and Ethereum mitigates the fear of missing out, ensuring a solid 5-7x return in the next few years.
Ethereum Layer 2s
Diving into my 2024 crypto portfolio, I've strategically segmented it into various sectors based on their potential impact. The first sector, Ethereum Layer Twos, commands a noteworthy share, with investments spanning 3% to 10.5% of my total portfolio. These enhancements significantly boost Ethereum's performance, making them a pivotal focus.
Arbitrum, holding 1% of my portfolio, stands out in the Ethereum Layer Two sector. Renowned for its high TV and transaction fees, Arbitrum leads among all Ethereum rollups, primarily fueled by DeFi activities. Its ranking as the fourth blockchain in TVL and first among Layer Twos is notable.
Arbitrum's adoption of optimistic rollup technology makes deploying and securing Layer 2 straightforward, earning high regard from the Ethereum community. Its smooth transaction performance, similar to traditional websites, enhances the user experience.
However, I'm cautious with my investment due to its tokenomics. A significant token unlock is scheduled for March 2024, increasing the circulating supply from 1.4 billion to 2.5 billion tokens. This initial surge will be followed by more gradual monthly releases, making post-March 2024 an opportune time to consider investing in Arbitrum.
Optimism, holding 1% of my portfolio, stands as a strong contender in the Ethereum Layer 2 space. Although initially trailing behind Arbitrum, Optimism is gaining momentum with its innovative Super Chain initiative. This allows partners to create their own Layer 2 solutions on the OP stack, creating a beneficial cycle for the OP token.
Prominent projects like Coinbase's Base Layer 2, Binance's OP BNB Layer 2, and Synthetix's DeFi-focused Layer 2 have adopted Optimism's technology. While its transaction performance doesn't yet match Arbitrum's, Optimism is pivotal in bringing major players into Ethereum's ecosystem. Its tokenomics appear favorable compared to Arbitrum, with the major unlock event already passed in June 2023, leading to a steady monthly release of OP tokens until 2027, avoiding market panics.
Polygon, taking up 1% of my portfolio, initially emerged as a side chain to Ethereum but has evolved into a complete ZK-rollup Layer 2 solution. In 2023, it became the first ZK Layer 2 with full EVM support to launch on Ethereum, accessible via MetaMask. Polygon is also pioneering an app chain approach similar to Optimism, offering choices between its stack for a ZK EVM rollup and Optimism's for an optimistic rollup. Major protocols like OKX and Immutable X are utilizing Polygon's technology for their own Layer 2 solutions.
Additionally, Polygon is revamping its Matic token to new tokenomics, transitioning to POL. With 92% of its total supply already in circulation, Polygon stands out for its advantageous tokenomics among Layer 2 solutions.
zkSync, with a 1% allocation in my portfolio, is a key ZK Layer 2 solution for Ethereum, excelling in DeFi adoption with the highest Total Value Locked among ZK EVMs. Its user experience is seamless, resembling Web2.0 platforms. While its gas fees are slightly above others, a refund mechanism offers 75 to 90% back, and users can pay fees with any ERC20 token, adding convenience.
The upcoming EIP 4844 upgrade is expected to drastically reduce transaction fees across Layer 2s.
Crucially, the zkSync token is yet to launch, offering an airdrop opportunity for active mainnet users. With its significant potential, zkSync's token launch is anticipated to be one of the most substantial since Arbitrum, making it a notable asset to watch.
In my 2024 crypto portfolio, Layer 2s like Arbitrum, Optimism, Polygon, and zkSync collectively make up 4%, a reduction from last year. This cautious approach reflects my view of their current overvaluation and upcoming token unlocks. Although I believe in Layer 2s for Ethereum scaling and foresee potential 10x returns, reaching $50-100 billion market caps, their limited exceptional return prospects lead to their smaller portfolio percentage.
For the next part of our 2024 crypto portfolio, we're exploring Layer 1 blockchains. Unlike Ethereum and its direct competitors, we're diving into unique Layer 1s addressing specific use cases that Ethereum doesn't cover. This section isn’t about Ethereum clones but about innovative platforms with distinct functionalities and markets.
Internet Computer ($ICP)
ICP, with 2% of my portfolio, is a standout in decentralized cloud infrastructure. Unlike others, ICP's 'canisters' offer a unique hosting space for full-stack web applications, much like AWS or Google Cloud, but fully decentralized. It supports not just smart contracts but also front and backend hosting, as evidenced by a Uniswap front-end clone and a Minecraft-like game, entirely hosted on ICP's blockchain.
Despite a rocky start with high valuation, its price has stabilized with a market cap of about $2 billion, making it more approachable. Most of its token supply is circulated, and its annual inflation rate is low. ICP's innovative approach to a niche market makes it a significant part of my portfolio.
Celestia, holding 2% of my portfolio, represents a unique approach in the blockchain world by separating the execution and consensus layers. This modular design allows for the integration of various virtual machines, like Ethereum or Solana, using any smart contract language. This flexibility is especially beneficial for layer two developers, who can use Celestia's storage and consensus without constraints. A big feature of Celestia is its light nodes, operational on mobile devices and Raspberry Pis, a true innovation enabling broader participation in network consensus.
However, cautious investors should note Celestia's current tokenomics. Having launched recently, only 14% of its 1 billion total supply is circulating. With significant token unlocks scheduled, including a major one in November 2024, it might be wise to wait for a more gradual token distribution post-unlock, when 45% of tokens will be in circulation.
Neutron, a new layer one blockchain launched in 2023, takes up 2% of my portfolio due to its immense potential. As a key player in the Cosmos ecosystem, it's seen as the successor to the ATOM token, backed by the Interchain Foundation and ATOM economic zone. Its unique feature is supporting smart contracts, addressing Cosmos' limitations. This enables Neutron to act as a DeFi hub, consolidating fragmented liquidity across the Cosmos ecosystem.
It's attracting major DeFi applications and tokens, promising to tap into a multi-billion dollar market. This capability sets Neutron apart, making it an essential addition to my portfolio, replacing the Cosmos ATOM token for the upcoming investment cycle.
In my 2024 portfolio, I've selected just three alternative Layer 1 blockchains, each with a distinct use case that Ethereum can't fulfill. My conviction in these picks is high. I believe the future will see Ethereum's Layer 2s replacing many Layer 1s, unless they pivot to unique functionalities. While Solana is an obvious choice, its current $30 billion market cap makes another 10x gain challenging, guiding my focus towards these three innovative and promising Layer 1 projects.
Injective (INJ), occupying 1% of my portfolio, stands out for its impressive growth from $1 to $17 and strong fundamentals. Built on the Cosmos stack, it utilizes the Inter Blockchain Communication protocol, integrating a diverse range of tokens beyond Ethereum's ERC-20.
Injective's DeFi suite includes token swaps, liquidity provisions, and advanced trading options through its Helix app. It uniquely supports assets from various ecosystems, aligning with the Cosmos DeFi Hub vision. This platform is poised to become a central hub for DeFi activities, leveraging its IBC stack to offer expansive asset support. Injective's past performance and its role in driving forward a multifaceted DeFi landscape make it a compelling choice for DeFi-focused portfolios.
In my portfolio, I've dedicated a segment to upcoming decentralized exchanges, focusing on cutting-edge, intent-based platforms. Unlike traditional DEXs, these new exchanges mirror over-the-counter trades, allowing direct, peer-to-peer transactions between traders and liquidity providers, bypassing conventional liquidity pools. This innovative approach links to centralized exchange liquidity, providing decentralized access directly from wallets.
Key players in this space include Symmio, which underpins these exchanges, and front-end applications like Intent X and ThenaFi. They enable trading of any token available on centralized exchanges like Binance, directly through DeFi interfaces, without intermediaries or KYC. While still experimental, these platforms promise high capital efficiency and broader trading pair access, merging decentralized trading's benefits with centralized exchanges' liquidity. I've allocated a modest 1% to this high-potential, high-risk category.
Prisma Finance, holding 1% of my portfolio, is a standout in the DeFi sector with its liquid staking approach. It leverages staked Ethereum assets like liol stake Ethereum to mint a stablecoin, similar to MakerDAO's DAI system, but with native yield generation. This mechanism offers passive income opportunities, tapping into the multibillion-dollar stablecoin market. Prisma's innovative approach in the crowded LSD market positions it uniquely against leaders like Lido and Rocket Pool, capturing a niche with significant growth potential in Ethereum staking. Its novelty and market capture potential make it a compelling addition to my portfolio.
Pendle, contributing to 1% of my portfolio, is a pioneering LSD platform offering unique control over staking yields. It allows for locking yields for fixed periods or accessing them early. For example, using Lio Stake, you can select maturity to alter yield percentages or even provide liquidity to earn additional yield as an LP. Pendle stands out as the original platform in this space, collaborating with major LSD protocols early on. While direct investments in staking protocols like Lido or Rocket Pool have limited upside due to market concentration, Pendle's advanced LSD offerings present a greater potential for growth in the evolving landscape of decentralized finance.
In my portfolio, I've earmarked 2% for future investments in LSD (Liquid Staking Derivatives) projects. This decision stems from my belief in the growth potential of Ethereum's staking market cap in the upcoming cycle. Currently, Ethereum's staking ratio is one of the lowest among major blockchains, at just 23%, compared to Solana's 69%, Cardano's 64%, Aptos' 81%, and others. As Ethereum's staking ratio climbs, more ETH will be staked, channeling into various staking protocols. This anticipated increase suggests that the LSD market has significant room to expand, making it a promising area for future investment.
Chainlink, occupying a significant 4% of my portfolio, stands as a leader in DeFi oracles and is emerging as a go-to solution for RWA tokenization. Beyond its well-known oracle services, Chainlink offers a comprehensive middleware suite, crucial for the DeFi ecosystem. Its CCIP ranks among the top three solutions for cross-chain interactions.
Additionally, Chainlink's functions and automation tools are vital for Web2 developers transitioning to Ethereum, simplifying their integration with smart contracts. Its data streams power high-frequency decentralized exchanges, ensuring real-time price updates. Chainlink's Proof of Reserves is instrumental in validating off-chain assets for on-chain deployment.
I envision Chainlink as an indispensable middleware layer for Ethereum projects, connecting them to the Web2 world. With its potential to become a top 10, or even top 5, cryptocurrency, Chainlink could reach a market cap between $100 to $200 billion. My optimistic price target for Chainlink is $240 per token, offering a 10x return, making it a worthwhile addition to my portfolio.
LayerZero, occupying 1% of my portfolio, is a prominent player in cross-chain interoperability, similar to Chainlink's CCIP. Distinct from siloed ecosystems or centralized bridges vulnerable to hacks, LayerZero fosters genuinely decentralized, cross-chain applications. Imagine securely depositing coins on Ethereum while exploiting Solana's lucrative yield opportunities — that's the innovation LayerZero offers.
While LayerZero's token hasn't launched yet, its expected early 2024 airdrop is eagerly anticipated. A current proxy bet is Stargate Finance's token, leveraging LayerZero technology. There's speculation about Stargate tokens converting or rewarding LayerZero tokens, although nothing's confirmed.
Axelar, constituting 1% of my portfolio, is a key cross-chain protocol within the Cosmos ecosystem, functioning as a settlement bridge for asset transfers from networks like Ethereum and Solana. Beyond bridging, Axelar serves as a generic message-passing middleware, akin to Chainlink's CCIP and LayerZero, enabling the creation of cross-chain decentralized applications.
A notable highlight is Axelar's involvement in a significant RWA tokenization partnership, indicating its advanced cross-chain interoperability technology. Axelar's token, initially valued at $1, is currently undervalued, even from a venture capitalist perspective, offering potential for mean reversion. This makes Axelar a compelling addition to my portfolio, alongside Chainlink and LayerZero, as one of the few true innovators in cross-chain interoperability.
Social Media Altcoins
DeSo, constituting 4% of my portfolio, is a unique player in decentralized social media. Originating as BitClout, it has raised over $200 million, maintaining a substantial treasury. DeSo's low valuation relative to its resources makes it a hidden gem. Unlike other blockchains, DeSo specializes in social media, offering smart contracts, cost-effective storage, and development kits. It supports various decentralized applications like Twitter, YouTube, and TikTok alternatives.
In comparison to platforms like Friend.tech, which focus more on yield farming, DeSo emphasizes transparent, uncensorable social media, aiming to revolutionize how we perceive and interact online. Its commitment to authentic, decentralized communication positions it as a leader in blockchain-based social media, justifying its notable presence in my diversified portfolio.
Rollbit, with 3% allocation in my portfolio, stands out as the sole crypto casino investment. Distinguished by its impressive revenue, Rollbit eclipses its closest competitor by 100 times, boasting an annual revenue of over $550 million. This performance places it among the top five crypto projects in terms of earnings, on par with giants like Uniswap and Lido.
Despite its success, Rollbit's market valuation remains at a modest $500 million, signaling a significant undervaluation. My conviction in Rollbit's potential is strong, and I anticipate its market cap reaching $2 to $3 billion, translating to a token price of $0.07 to $1. This potential for growth highlights its substantial share in my portfolio.
Superverse, contributing 3% of my portfolio, launched in February 2021, it initially focused on the SuperVerse DAO and the game 'Imposters,' similiar to Among Us. However, major upcoming shifts in early 2024 promise groundbreaking developments. Superverse's connection with Neo Tokyo, led by Elio Trades and Alex Becker, enhances its prospects. Neo Tokyo has fostered alliances with key gaming projects, offering early investment opportunities in high-profile games. Superverse’s integration into this ecosystem positions it as a gateway for gaming enthusiasts. While the current rally seems extended, my strategy involves re-entering at lower consolidation points or post-breakout retests, targeting a potential exit around $1.60 to $1.80.
Immutable X ($IMX)
Immutable X, holding 1% of my portfolio, stands out as the go-to Ethereum layer 2 solution for gaming and NFTs. Although not the top overall layer 2, its gaming-focused technology makes it a leader in this niche. It uses ZK rollup technology, ensuring zero-cost and instant transactions, ideal for gaming applications. Immutable X demonstrates adaptability in scaling technology with its two chains: one built on Starkware and the other on Polygon's CDK solution. This flexibility suggests that Immutable X will maintain its lead in gaming infrastructure, especially as layer 2s become crucial for Ethereum's adoption in the coming years. Immutable X's alignment with Ethereum also positions it well in the layer 2 landscape, unlike gaming-focused layer 1 blockchains that might lag behind in the next cycle.
Beam, occupying 1% of my portfolio, transitioned from a gaming guild (Mirror Circle) to a gaming infrastructure, with its treasury exceeding $94 million, including substantial cash reserves. It's not just an infrastructure play but also a strategic investment in top crypto games like Snack Club and Vulcan Forged.
Initially built on Avalanche's tech stack, I anticipate Beam transitioning to an Ethereum-native Layer 2, aligning with technologies like Polygon or ZK Sync. Valued at $378 million, Beam stands as a potential competitor to Immutable X, offering a similar value proposition in the gaming infrastructure space, but at a more undervalued price point.
Crypto Gaming Infrastructure
I've reserved 1% of my portfolio for the emerging crypto gaming infrastructure projects, anticipating a shift from play-to-earn to more engaging gaming experiences. Key players like Ready Games, notable for their blockchain interoperability and web 2 integration, are leading this evolution, bringing actual fun back into the gaming sphere.
Prime, comprising 0.5% of my portfolio, is a key player in the web 3 gaming sector. Behind the successful trading card game "Parallel," Prime experienced significant growth during the 2021 NFT craze. This factions-based card game, reminiscent of Magic the Gathering and Hearthstone, boasts impressive aesthetics and gameplay quality. Its token, deeply favored within the DeFi and DAO communities, hints at a strong on-chain presence. While Prime is working to extend its ecosystem across various games, its impact remains largely unexplored. Prime stands out not just for its gaming success but also for its popularity in crypto circles, despite lacking typical play-to-earn features.
Shrapnel, accounting for 0.5% of my portfolio, is a promising AAA-level Web3 game. Styled as a first-person shooter akin to Call of Duty, with added build abilities, Shrapnel is creating buzz for its realistic, modern setting. Backed by notable supporters including Twitch star Myth, the project raised over $20 million for development. Though gameplay content is currently limited to trailers, its high-quality graphics and potential comparability with top-tier games like Call of Duty are notable.
The Shrapnel token trades at 20 cents, with a 3 billion total supply, valuing the project at a reasonable $600 million market cap. As one of the most anticipated AAA Web3 games, its early token release makes it an intriguing investment, yet it's a modest portion of my portfolio.
Upcoming Web3 Games
I'm allocating 4% of my portfolio to exciting upcoming Web3 games, anticipating a vibrant market shift from previous play-to-earn models to more engaging and innovative gaming experiences. Noteworthy titles include "Dead Draw" by Dr Disrespect, "Tree," "Airon," and "Spark Ball." Finally, "Citizen Conflict," although not AAA-grade, boasts a rich content system and strong user engagement, making it a potential standout in the web3 gaming world. These games represent a shift towards quality and fun, making them worthy of attention in the upcoming year.
Render Network ($RNDR)
Render Network is revolutionizing GPU rendering with a distributed platform, enabling users to share their graphics processing power. Initially focused on rendering graphics and 3D models, Render is now pivoting towards AI applications. As AI grows, so does the demand for GPUs, potentially boosting Render's utility and token value. Upcoming developments include a new token model, potential integration with Apple's Vision Pro line, and the launch of IO Net, projected as the largest GPU decentralized network. These advancements position Render at the forefront of the AI-driven market, capitalizing on the increasing need for decentralized GPU resources.
Akash Network ($AKT)
Akash Network, occupying 1% of my portfolio, is a leading decentralized cloud solution for buying and selling computing resources. As a key competitor to Render Network, Akash stands out with its functional decentralized GPU network.
With a fully diluted market cap significantly lower than Render's ($350 million vs. $1.7 billion), Akash is notably undervalued. Its cloud platform supports popular AI models like GitHub Co-pilot, ChatGPT, and Stable Diffusion, highlighting its advanced capabilities. Combining decentralized cloud rendering with AI platforms, Akash is an undervalued asset in the AI and GPU infrastructure sector, justifying its place in my portfolio.
Upcoming AI Projects
To encapsulate the AI sector of the portfolio, 4% is reserved for budding AI crypto projects, reflecting the sector's infancy. Key focus areas include decentralized AI model training and utilization, and decentralized AI agents. However, many initiatives seem premature, merely merging AI and blockchain without cohesive crypto-economics. A promising avenue is decentralized GPU networks, a validated model harnessing crowd-sourced GPU power. Two emerging projects under observation are GPU.net and Blue Whale, with GPU.net boasting an extensive inventory of high-end Nvidia GPUs and Blue Whale exploring web 3 data personalization. Another intriguing venture is AIT Protocol, incubated by the successful PalMind project, with its upcoming IDO offering an enticing entry point. The sector's potential is high, yet judgement is key in selecting long-term viable projects.
To wrap up, in my 2024 crypto portfolio, I've allocated 1% each to Dogecoin, Shiba Inu, and Pepe for diversification, as meme coins operate independently from other crypto categories. Dogecoin, the original meme coin, has potential for a boost if integrated with Elon Musk's ventures. Shiba Inu stands out with a committed team and an array of products like a layer 2 solution, exchange, NFTs, and a metaverse. Pepe, a newer entrant, gained traction in 2023 and has most of its supply circulating, minimizing insider selling risk. Meme coins, free from technological obligations and security risks, offer a unique investment opportunity despite their unpredictable nature.
The Full List
Altcoin Market and Project Updates
Now, let's check out the major altcoin gainers and losers from the past week, and catch up on key project updates.
Best Performing Coins of The Week
Worst Performing Coins of The Week
🟠 FTX and Alameda transfer $22M in crypto assets during ongoing bankruptcy proceedings and asset liquidations.
My 2024 crypto portfolio strategically balances diversification and targeted investment in 29 altcoins, with Bitcoin and Ethereum as foundational assets. Key highlights include a 4% stake in Chainlink and Diesel, indicating high confidence in these altcoins. Robit and Superverse also hold substantial positions at 3% each.
Sector-wise, DeFi dominates with a 10% allocation, reflecting my bullish stance on this category. Gaming, comprising infrastructure and games, collectively represents 11% of the portfolio, underscoring my enthusiasm for this space. Layer 2s, Layer 1s, cross-chain, and social categories each claim 4%, with meme coins and gamble-fi receiving lower percentages.
This portfolio, while specific to my insights, serves as a foundation for individual research and investment decision-making as we anticipate a growth surge in Bitcoin and altcoins in late 2024.
As always, we've also taken a look at the altcoin market's biggest movers, alongside the key project updates from the past week. Stay informed and prepared for what's next in the dynamic world of crypto.
The BEST Crypto Portfolio for 2024 (Complete Breakdown)
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