Crypto Market Update: Q4 2024 - Q1 2025
If case you haven't noticed, Bitcoin has just broken through its all time high. At the time of writing this article, it is sitting at $93,000.
If you read my series on Crypto and the Changing World Order, you will already have a solid thesis for investing in crypto. In fact, had you invested $10,000 in Bitcoin after reading my first article, you would now have $31,000. Needless to say, that series has aged exceptionally well.
However, there is still opportunity to make money in crypto this bull run, and I want to lay out a thesis on this bull run and where I think things are headed.
Before that though, some housekeeping:
This is not financial advice. there is no guarantee that crypto will continue appreciating in value, consider any money invested to be money you have lit on fire. it's gone, just be happy you got to spend time with it. Only invest money you are willing to lose. I am not liable for your financial decisions. The problem of induction is a real concern with asset purchases.
Or in other words: don't put your rent money into Bonk coin. Got it?
Trump and Musk – Why this cycle is going to be Different.
The Crypto rally we are seeing is largely due to a single event: Trump was elected president of the United States of America. This is an event that billions of dollars were used to bet on, most of which using crypto.
There are a couple of connected news headlines that tie this all together:
Donald Trump started accepted crypto as donation to his political campaign. this is a link to his actual campaign website. He also was selling NFT's (back when people thought those had value) to support his campaign.
Trump also has become a vocal advocate for Crypto currency. Speaking at the 2024 Bitcoin Conference he said: "I'm laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world". He later he added that he would fire Gary Gensler and appoint a new SEC chairman. Gary of course being the SEC Chairman who was pushing for crypto to be held to the same regulatory standards as Stocks and Bonds.
He also said he would free the founder of the Silk Road, a dark website where people bought and sold illegal goods (like drugs, weapons, etc.) largely using crypto.
So trump has seemingly become a huge advocate for Crypto, also saying that the he would create a national bitcoin reserve by preventing the government from selling the assets it has seized in criminal cases. Effectively locking the 200k bitcoins (currently worth $18,879,000,000. yes that is 18 billion dollars) the US Government owns (Much of which was seized from the Silk Road), further decreasing the supply of bitcoin.
If you are wondering why bitcoin has had a parabolic rise in the last week, this is (largely) why.
Oh, Also... Elon Musk donated over $200 Million to Trumps Campaign to help him get elected.
Elon has been a huge advocate for Doge Coin in the past, to the point that developers made bots that would buy Doge anytime Musk tweeted about it (and made a killing doing it).
Musk was also just selected by Trump (along with Vivek Ramaswamy) to run a brand new government agency, the Department of Government Efficiency (yes... the DOGE).
After Doge became increasingly popular with Musk and his devout followers, hundreds of derivative tokens appeared which have also had major success due to be associated with Doge by two connected themes:
- They usually have a dog in the logo (like Shiba Inu, or Bonk)
- They are "meme coins"
Meme Coin Revolution
If you needed any proof we are living in an idiocracy, here it is.
Stock market trading is usually performed based on fundamentals. You read through hundreds of pages of internal company reports until you find an unannounced headline grabbing detail... maybe their earning are way higher or lower than anticipated, maybe the new CEO cut costs or is about to announce layoffs to increase profits, maybe the CEO's child just got very ill and he will have to step down during this hard time with his family.
Whatever the case may be, it gives you an edge in investing. You know something not everyone knows yet. So you can Long or Short the stock, or buy put or call options, and wait for the news to break to close your position for a sizable profit. this is the kind of thing that Martin Shkreli used to do a lot of (and live stream) before (and after actually) becoming the most evil man in the galaxy (when he hiked the price of an anti-malaria medication often prescribed for HIV patients – by 4,000%).
I digress...
Most of Crypto has always been more about market sentiment than fundamentals. Bitcoin has deflation built into it's code, and blockchain technology is a major leap in online security (which we are still on the front end of). Gaming Tokens and Ecosystems (like Ethereum and Solana) are also based on fundamentals to a lesser extent, you invest in a Crypto Gaming project because a ton of people will play the game. And users are already familiar with microtransactions, spending hundreds or thousands buying in game clothing items and weapon camo's.
But those aside, we are entering a new era in crypto.
Political Agnosticism
Quick disclaimer here: I am not advocating for, or supporting, any particular person or politician in this article. I am a centrist, and there is something about my position to piss off just about everyone. What I am discussing here are the facts: Trump was elected, he will be in office early next year, and here are the ramifications of that.
Whether these are long term benefits for crypto or the economy as a whole, no one knows. but here is one thing I know for sure:
The feeling everyone right of center seems to have that the economy is back on it's feet and ready for a massive 4 year long rally (at least) is based solely on sentiment.
Don't believe me? who is the current president of the United States? yes it is still Joe Biden. All of this crypto rally and economic euphoria is happening during Biden's term. This is important to note, because as investors we are not interested solely in short term gains, we are interested in the long term. I will lose $50,000 with a smile on my face if I know I can make $200k down the road. So don't lose sight of the fact that market sentiment cannot carry us out of a recession forever, and it remains to be seen how Trumps policies will actually affect the economy once they make contact with the thick membrane of reality.
If you have not read my series on the changing world order, give it a once over, my thesis still remains in tact today: you want to give yourself options. Especially in turbulent times.
Should you Buy Crypto? What about Bitcoin?
To quickly summarize what I wrote in my Simple Trading Guide:
Market cap is the total amount of money (in our case USD) that is stored in an asset. Bitcoin just flipped silver and now has $1.82 Trillion dollars stored in it.
An easy way to look at how much you can expect to gain on an asset is to consider this metric. For bitcoin to double in price, the market cap also needs to double. If you put $1,000 into bitcoin and expect to get a 2x return, an additional $1.82 trillion would need to flow into Bitcoin.
For reference this would make it worth more than all of these companies sitting under gold:
No easy feat.
Now something new since the last bull cycle is that the Bitcoin ETF's have been approved and are fully operational. this means traditional investors with managed accounts can buy Bitcoin the same way they might buy Apple stock (which defeats most of the benefit of crypto, but its an easy gateway and benefits those of us buying crypto the traditional way). this is in part why bitcoin has been able to overtake silver and Armco within 7 days. pretty incredible.
that being said, Bitcoin is a long way off from gold (though the price of 1BTC at the market cap of gold would be around $800k). Is it a good idea to throw some money in Bitcoin right now? if you plan to hold it for the next 10 years, sure.
History does not always repeat itself, but if it does (and It likely will) Bitcoin will have a large pull back later this year, and then start rallying again later in Q1 of 2025. I am not clairvoyant, but this falls in line with the usual pattern. If you want bitcoin exposure, i would aim for later this year (or whenever you see prices coming back toward the $60-70k range, possibly lower).
Better options than Bitcoin?
The usual crypto cycle looks like this: Money flows into Bitcoin, people take their profits and roll them into high cap alt coins (like Ethereum and Solana), then they take their profits from those tokens and roll them into shit coins and low cap alt coins (like Shiba Inu, Pepe, gaming tokens, etc.).
This cycle is different already, because meme tokens have been prioritized. that being said, Bitcoin is outperforming the entire market by a mile, and Eth/Sol/Avax/Doge/etc. have yet to surpass their all time highs. If I was new to crypto, this is where I would be eyeing places to put money in the short term.
Don't buy anything without reading my guide I linked above, I always recommend dollar cost averaging and not spending money you can't afford to lose (especially on a token called Shiba Inu... come on guys).
But over the next few years, I anticipate crypto as a whole to rally to insane prices, though we will have to wait and see. And if Trump does fulfill his promise and fire the Gary Gensler, that will put a temporary nail in the crypto regulatory coffin which should bring some major gains (though they will probably be priced in already to some extent).
Back to Meme Coins – which ones should you actually Buy?
Alright, here is the deal. I believe that meme coins will outperform other assets by far this bull cycle. I also know for a fact that they are inherently riskier than larger assets (like Bitcoin, ethereum, solana, etc.).
We have fully embraced the kind of economic and political hedonism that can really only come from having a former reality TV star as our commander in chief, and Elon Musk helming a government agency that was named AS A JOKE to reference a Meme token (sometimes called "shit coins").
I do not say this to denigrate either of them or our country, but rather to point out how beyond insane our circumstances are, regardless of who you support.
So there it is, that's my financial thesis: Doge coin, Shiba Inu, Bonk, Pepe, and any token that falls under the Meme category have a major chance to shine this cycle.
More conservatively I anticipate Ethereum and Solana (among other mid cap alt coins) to have a rally past their all time highs in the near to mid term. with their lower market caps, they have a chance to 3x-5x their current prices, while the lower cap meme coins could 10x-20x (or they could all run to $0, this is a real possibility so be careful out there, remember when I said not to invest your rent money into Bonk? this is why).
As always there are no guarantee's in crypto, but if you have a little extra cash I would recommend meme tokens and low cap alts with a cautious mindset, and make sure to sell at a profit (the price will come down and erase your gains at some point). read my series as a primer for more info.
One Last Note on Sentiment.
As far as I am concerned, the Economy as a whole is sustaining itself on market sentiment right now, and I expect this to continue through the next 4 years. Whatever your political opinions are, here is what is true:
Over half the country voted for Trump, and they believe his promises to fix the economy. Whether or not his policies work remains to be seen, but the American people believe it is already working (despite him not yet being in office). the future looks optimistic for most Americans financially speaking, and that will be reflected in how they spend their money. Asset prices going up is a good thing, but only so long as you tangibly benefit.
Do not believe that high asset prices makes you rich; asset prices fall. Interest rates go up and come down and go back up again. the US Dollar is still in decline, and by design almost every economic intervention which seeks to stimulate economic growth also deteriorates the value of the dollar. Tax incentives, government programs, stimulus checks, first time home buyer credit and down payment assistance grants... for every action there is an equal and opposite reaction.
Whale Fall Season.
At the bottom of the ocean life is minimal. But every once in a while, a whale dies, and when it does it's carcass sinks to the bottom of the ocean where the bottom feeders feast on its flesh. during this time there is a massive market boom as all of the lobsters and squid and octopus' feel as though this abundant food supply will last forever. they have babies, those babies eat, and then one day the food is gone and most of them die off.
The crypto rally is a time of whale fall, so is this entire economic boost we are feeling right now. but what goes up will come down. You want to give yourself options.
Or as the Principia Discordia states:
Time flows like a river. Which is to say, downhill. We can tell this because everything is going downhill rapidly. It would seem prudent to be somewhere else when we reach the sea.
Don't forget to take profits.