Designing a Crypto Portfolio for the 2024–2025 Bull Run

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15 Mar 2024

abstract

Historically speaking every crypto bull run has created a new millionaire, some of which started with less than $10,000 of capital. These crypto bull runs have been occurring every 4 years almost like clockwork in relation to the Bitcoin halving. Although, it is not certain, there is no reason to believe it will not occur again, and are you prepared to become a crypto millionaire?
In this article, I will go over 11 crypto niches (from AI to Gambling) that I believe will experience exponential value creation in the expected bull run of 2024 and 2025. The goal is to help the reader investigate and create a diversified crypto portfolio to convert a small amount of capital into a life changing financial freedom.
Fictional Crypto Portfolio

Introduction

In this blog series, I will review various crypto niches that are likely to benefit from exponential growth in the next bull run expected in 2024 and 2025.
The categories I will investigate are: 1) Layer 1, 2) Layer 2, 3) Artificial Intelligence, 4) SocialFi, 5) GamblingFi, 6) DeFi, 7) TradeFi, 8) GameFi, 9) Stablegrowth, 10) SEC Compliant Securities, 11) Asset-backed token
You may refer to some of my previous work on tokenomics design and analysis as background information that can be used to assess the financial sustainability of the various projects that will be reviewed in this blog series.

Layer 1 — Blockchain Infrastructure

These types of crypto-currencies are what powers the blockchain industry; most decentralized applications (dApps) are built on layer 1 protocols such as Ethereum, Solana, Binance Smart Chain, etc. Many of these have been around for a few bull runs, and are unlikely to grow massively in the next peak of the market, however they are in certain cases a relatively safe bet. I would throw in Bitcoin as well, even though it doesn’t power any dApps at the moment, simply because of the upcoming Bitcoin/Ethereum ETF’s that will bring large amounts of institutional money.

Layer 2 Protocols

In the case of Ethereum, the vast majority of dApps are built on Ethereum, but since the speed and cost of transactions of the Ethereum network is limited, layers 2 are the next best thing as it enables relying on the security and stability of the Ethereum network. To name a few, you may look into Polygon Matic, Arbitrum, Optimism, etc.

Artificial Intelligence

The Artificial Intelligence (AI) industry is growing rapidly, especially since the success of ChatGPT from OpenAI. There are a number of AI projects that are built on blockchain technologies, or have significant relationships with web3 economies, however many of these are just about slapping a keyword in order to raise significant Venture Capital. With this in mind, I will be reviewing various projects in an upcoming dedicated blog post. With that said, the reason why such tokens are big on my radar for building a crypto portfolio is that while some may see significant growth in the next few years, others may not perform that well until several years later when a significant technological breakthrough occurs and commercial interest and use cases become commonplace. One day, we may experience the “singularity” where AI becomes equivalent to human capacity, and quickly surpasses our ability, in which case as human irrelevance in the workforce takes place, ownership of such AI technologies will be key to prevent individual financial collapse. For these reasons, I would argue that investing in AI technologies is critical as a hedge to obsolescence, or simply to stay in front of the technological innovation phase. AI technologies could be the most significant wealth producing that could ever emerge once the technology surpasses human capacity (or alternatively that human+AI surpass human alone).
I would take a special look into Generative AI technology applied to SocialFi.
Artificial Intelligence intersecting Blockchain

SocialFi

There are 4.7 billion people on social media. Some age groups spend more than 5 hours a day on social media. This is one of the single largest categories that consume our active attention. Attention is one of the most valuable concepts of our time, while some companies can monetize people’s attention better than others, we are all competing for attention. We can even consider that some companies are willing to pay a significant amount of money to obtain the attention of certain individuals. For example, some high level lawyers can charge $1000 an hour, so any amount of time whether it is for entertainment, or for work is worth a lot to them since they can be converted to put their purchasing power behind their attention. What is the difference between a company paying an employee and a company spending on advertising to attract a customer? In reality it is all about transforming time into value. From this perspective, SocialFi is one of the most important attention-grabbing industries currently available. The cost of producing content can be much lower than other industries, but one thing remains… Quality attention-grabbing content is key. While traditional social media companies often benefit from solid network effects, I would aim at identifying mechanisms that support traditional social media, or that provide value that is currently not offered by such existing providers. If you imagine that Bitcoin is currently held by approximately 200M users and has a market capitalization of $1T, then you can imagine what would a SocialFi project with 1B users be worth? Eventually, existing web2 social media providers may be disrupted, but it would have to be done in phases and not done head to head from the start.

GamblingFi

Gambling in many countries is regulated and controlled by governments as a silent tax system on the willing boosting $702 billion dollars worldwide. Given the advantage of blockchain technologies, and the psychological traits of a large portion of users in the crypto industry, it is prone to see significant growth in this sector. We can expect some clash backs from governments, but it is the next step of evolution before we see some worldwide lottery emerge such as the PowerBall, currently not blockchain powered, but likely to become for the added benefit as time goes by. The largest single jackpot of the PowerBall was a whooping $2B, won by a single Californian player.

DeFi

Decentralized Finance (DeFi) has been the talk of the town in the last crypto bull run, but I expect it is far from over. I would argue that as institutional players grow an appetite for the crypto space, that new emerging derivatives will be needed to attract a very large segment that have so far shy away from the crypto industry. Worldwide, there are $180T of corporate treasuries held in banks and none of that money can suffer massive volatility, so Flatcoins, a low volatility, inflation hedging and liquid asset is what the world needs to attract probably the largest niche the crypto industry could ever attract. Additionally, once Flatcoins are in place and reliable, we can expect decentralized banking (non-custodial) to really take off. It may take more than 1 bull run to really achieve the needed transition, but I would start placing bets in these areas.

TradeFi

With the Bitcoin ETF pending, the tech stack required by institutional players will be growing, I would look further into Option Trading such as Deribit. As well, any tools related to increasing/reducing risks to achieve higher returns or hedging should benefit these users, but regulatory compliance will be key to enable these users to become customers.

GameFi

Just like SocialFi, GameFi, often referred to as Play-to-Earn, can attract billions of users, but the development cycle and budget involved can be massive. During the last crypto bull run of 2021, Axis Infinity was an eye opener to many large game studios, which allocated budget to develop titles, and many of these titles will be coming on to the market in the near future and during this coming bull run. I suspect there will be very big winners, but I would avoid betting on low budget titles, unless they are able to attract mobile players or the female player niche. Triple A games that target hardcore male players should be avoided by new or small gaming studios.
Illuvium, an anticipated AAA Play-to-Earn game

Stablegrowth, i.e. Flatcoins

As mentioned earlier, flatcoins are the future to replace stablecoins. No entity has yet been able to create a reliable flatcoin, but it is something to be expected soon. This could be the largest new niche of 2025, and while you won’t see massive price growth for these tokens, what you’d get in return is a replacement for stablecoins USD-pegged currency which loses to inflation every year. Crypto companies often raise for many years and as such need to manage their treasury more efficiently than typical tech startups. As well, most web3 companies that are launching a token need to pair their tokens with other crypto assets for users to be able to trade them, which means they all require large amounts of USD-pegged stablecoins usually. Once, a flatcoin is credible enough to replace USDT for example, it will be a massive benefit to the crypto industry.

SEC Compliant Securities

As US institutional players move into crypto with the pending BTC/ETH ETF, they will grow an appetite for additional SEC compliant securities, and as of now there are only a handful of such assets on the market. There are two ways to be SEC compliant, either the crypto asset is not considered a security at all such as Bitcoin, or it is registered correctly as a security, all the rules exist for equity crowdfunding with the Reg D, Reg CS, etc. Most web3 founders simply disregards the rules from a lack of knowledge or simply because they want to express their rebellious nature, but I would expect a major shift is about to happen. The web3 entrepreneurs who will follow the rules, will see massive potential growth with institutional investors, and will be very much worthwhile for the additional effort.

Asset-backed token

Often referred to as real world asset backed tokens such as real estate should also see some decent growth in the near future. I would argue that the tokens themselves won’t grow massively, after all you can’t expect real estate to grow 10,000% in a year, but the companies that provide tooling for these tokens are likely to experience exponential growth. While real estate is interesting, businesses of all kinds could also be tokenized and owned by a large community of their own customers. For example, if you are addicted to a certain brand of coffee, and this coffee company tokenized itself, you could become an investor in the company behind the product that you consume repeatedly. It is the same principles as a company going to be publicly listed on the stock market, but tokenized versions allow lower amounts of money to be invested with other benefits such as loyalty programs combined with the ownership of the token itself, which would be very hard to manage with an equity only version of the process.

Conclusion

Once you have selected a few different categories of interest to build a diversified portfolio, the next step will be to identify specific gems within each category and ensure that your allocation to each project is small enough not to worry about significant losses. The truth is that many projects you may pick could experience a 10X to 100X or even more growth in the next two years, and for these reasons, a good strategy is once an allocation has significantly grown, you can sell a portion of this capital, and re-allocated to new investments as long as you are still early in the bull run cycle. In which case, you can compound your returns while increasing your diversification until the moment you start converting most of your investments into profits and partially get out of the market for the ultimate downtrend. At such a point, it is entirely possible you will have achieved your goals of financial freedom. The biggest problem that most new crypto investors face is not taking profits while it was time.

About

Crypto Rookies is a crypto investor, serial entrepreneur in Artificial Intelligence and Web3/crypto with expertise in tokenomics and market making. Currently CEO of Smooth, which focuses on solving the problem of 95% of crypto-currencies failing in their first 2 years.
Smooth prevent such failure by:
1) Community building with AI (don’t waste money on marketing & influencers)
2) SEC-compliant Tokenomics
3) Market Making (hybrid between stablecoins & altcoins)
4) Treasury management (10%-100% APY depending on risk)
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