December 2024 - Monthly Market Update
/Monthly Update || December 2024
“All investment approaches go in and out of favor.”
Opening Remarks
Greetings from Ikigai Asset Management¹. We welcome the opportunity to bring to you our seventy-fifth Monthly Update and hope these are helpful in better understanding some of what we’re doing and what we’re seeing. We have the privilege of deploying capital on behalf of our investors into a new technology and asset class that has tremendous potential to make the world a better place and create trillions of dollars of value in the process.
We believe we are obligated to be shepherds of this technology – to do our part to push crypto towards fulfilling its potential. We strive to be an objective, reasonable, well-intentioned voice of truth amongst a chorus of biased, fallacious, pernicious opportunists. It’s an honor that we take seriously.
To that end, November 2024 was one of the most positive months in crypto history, full stop. If you’re not at least a touch euphoric while reading this, you must not own enough crypto. The election was SUCH a good outcome for crypto and Bitcoin. We’ll never know how bad a Harris admin actually would have been, so it’s hard to know exactly what that multiverse outcome would look like. But I can assure you it would have been much, much worse than what we’re getting now. So this is a real cause for celebration.
We’ll get into more detail on what this Trump administration means for Bitcoin and crypto here shortly. And I don’t want to spend a bunch of time here banging the drum on why this election was tremendously positive for America, Americans and humanity in general. But I do want to say that I am enormously hopeful for the future of this country – in the near term and the long term. Put crypto to the side for the moment. Put your pumping bags to the side.
THE DIRECTION OF THIS COUNTRY JUST TOOK A TREMENDOUSLY POSITIVE TURN. Probably half of you reading this strongly agree with that statement. Another quarter or so somewhat cautiously hope that to be true. And maybe a quarter of you completely disagree with that statement. I’m not going to argue the points here. But if you have been so brainwashed by mainstream media, or allowed a loved one who was brainwashed by mainstream media to in turn convince you that Trump is a fascist dictator – I invite you to write down your fears in a Google Doc. Write down that you’re scared for women’s rights; freedom of speech; the sanctity of our democratic ideals. Whatever your fears are about a Trump presidency – write them down now and set a calendar alarm to look at them once a year for the next four years. Go back and read your fears that you feel now. See how it works out.
If you are continuing to get your news from mainstream media – please stop. CNN. CNBC. Fox News. CBS. NYT. Washington Post. If you consume content from these outlets and others like them, I urge you to stop. They do not have your best interests in mind. Or America’s best interests. Or humanity’s best interests. Be mindful of where you get your information from.
If you want to know exactly what Trump is planning on doing – he’s been telling you directly. Through a series of short videos, linked here. I invite you to watch some or all of them. He tells you in those videos precisely what he is going to accomplish. If you’re worried about what he’s going to do, at least these videos will help you formulate precisely what you’re worried about. And if you’re excited about Trump, these videos will help you hold his administration accountable in the future to the promises of change he’s making today.
Hope is SUCH a better emotion than fear. I won’t say that fear doesn’t have its place because that emotion was forged through billions of years of evolution and it certainly does have its place. But hope. HOPE. Hope is what makes the world go round. A belief in a better tomorrow, serving as the fuel for today to go do our own little part in that effort. I am so hopeful.
November Highlights
Trump Wins Decisive Victory, Republicans Take House and Senate, Crypto Moons
Trump Rumored to Name Crypto Czar to Head Up New Crypto Oversight Counsel
Much Conjecture as To Likelihood of Establishing Bitcoin Strategic Reserve
Trump Rumored to Eliminate Capital Gains Tax on US-based Crypto
Scott Bessent, Notable Crypto/Bitcoin Bull, Named Treasury Secretary Nominee; Howard Lutnick, Notable Crypto/Bitcoin Bull, Named Commerce Secretary
Crypto PAC Fairshake Tremendously Successful, 53-9 Winning Record in Involved Races
MSTR Purchases $12bn Total BTC in Three Separate Portions
BTC ETFs See $6.5bn Inflows, ETH ETFs See $1.1bn Inflows
IBIT Bitcoin ETF Options Launch
Gary Gensler Announces His Resignation Effective January 20th
18 States Sue SEC for Constitutional Overreach and Unfair Persecution of Crypto
Phantom Wallet Reaches #5 in Apple Appstore, Coinbase Reach #13
Pennsylvania State Legislature Introduces Bill to Enable State to Hold Bitcoin on Balance Sheet
Trump Admin Rumored to Have CFTC Lead Crypto Regulation
Court Strikes Down “Dealer Rule”, Says SEC Overreached Its Statutory Authority
Court Rules Sanctions Against Tornado Cash Smart Contracts Are Unlawful
Charles Schwab to List Spot Crypto
Cantor Fitzgerald to Acquire 5% of Tether for $600mm
Marathon Holdings Acquires $615mm of BTC with Convertible Note Proceeds
Coinbase to Delist wBTC Due to Justin Sun’s Involvement
Manhattan US Attorney’s Office to Reduce Pursuit of Crypto Cases
FBI Raids Polymarket CEO’s Home Post-Election, Seizes Phone and Computer
RobinHood to Relist SOL, ADA, XRP After Delisting Due to SEC Complaints
Justin Sun Purchases $30mm of Trump’s $WLFI Tokens
Crypto Funds BlockTower and Arca to Merge
FTX Estate to Begin Distributions No Later Than March 2025
FTX Estate Sues Binance, Changpeng Zhao Seeking $1.8bn Clawback
Tether Trade Finance Completes Funding of First Crude Oil Transaction for $45mm
BlackRock Launches Buidl on Aptos, Arbitrum, Avalanche, Optimism and Polygon
| Asset Class | Nov | Oct | Q3-24 | Q2-24 | Q1-24 | YTD | Q4-23 | Q3-23 | Q2-23 | Q1-23 | 2023 | 2022 | 2021 | Instrument |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Bitcoin | 37% | 11% | 1% | -12% | 69% | 128% | 57% | -12% | 7% | 72% | 155% | -64% | 60% | BTC |
| NASDAQ | 5% | -1% | 2% | 8% | 8% | 24% | 14% | -3% | 15% | 21% | 54% | -33% | 27% | QQQ |
| S&P 500 | 6% | -1% | 6% | 4% | 10% | 26% | 11% | -4% | 8% | 7% | 24% | -19% | 27% | SPX |
| Total World Equities | 4% | -2% | 6% | 2% | 7% | 19% | 10% | -4% | 5% | 7% | 19% | -20% | 16% | VT |
| Emerging Market Equity | -3% | -3% | 8% | 4% | 2% | 8% | 6% | -4% | 0% | 4% | 6% | -22% | -5% | EEM |
| Gold | -3% | 4% | 13% | 5% | 8% | 28% | 12% | -4% | -3% | 8% | 13% | -1% | -4% | GLD |
| High Yield | 1% | -1% | 4% | -1% | 0% | 3% | 5% | -2% | -1% | 3% | 5% | -15% | 0% | HYG |
| Emerging Market Debt | 1% | -3% | 6% | -1% | 1% | 3% | 8% | -5% | 0% | 2% | 5% | -22% | -6% | EMB |
| Bank Debt | 1% | 0% | 0% | 0% | 0% | 0% | 1% | 0% | 1% | 1% | 3% | -7% | -1% | BKLN |
| Industrial Metals | -2% | -1% | 3% | 12% | -2% | 10% | -5% | 7% | -11% | 4% | -6% | -13% | 29% | DBB |
| USD | 2% | 3% | -5% | 1% | 3% | 4% | -5% | 3% | 0% | 0% | -2% | 8% | 6% | DXY |
| Volatility Index | -42% | 38% | 34% | -4% | 4% | 9% | -29% | 29% | -27% | -14% | -43% | 26% | -24% | VIX |
| Oil | -2% | 6% | -13% | 1% | 18% | 7% | -18% | 27% | -4% | -5% | -5% | 29% | 65% | USO |
SOURCE: TRADING VIEW. AS OF 11/30/24.
What Is To Come of Bitcoin (And Crypto)— Part 2
The main section of my August 1st letter was titled “What Is To Come of Bitcoin?”. It was a good one. The first few paragraphs are about as clean of a value proposition for BTC as I’ve laid out before. Good copy and paste to send to friends and family trying to learn more. And then later on I get into what a Harris admin would look like for BTC and crypto vs a Trump admin. Pretty much everything I wrote there still stands now in light of Trump’s win. And we’ll get into some more specifics with the information we have now.
The biggest swing factor for BTC is the Bitcoin Strategic Reserve (BSR) that could potentially be established by the US government. The BSR would be enacted by a bill that Cynthia Lummis introduced in July. The TLDR is the bill would have the US Treasury buy 200k BTC a year for 5 years, 1 million total. Lummis has been pushing for the BSR heavily since the election –
If you’re making any sort of price call on BTC this cycle, you have to take a view on the BSR. Does it happen? Over what timeframe? What likelihood is the market currently assigning to a BSR? What new information will come to light that will shift the market’s view on the likelihood of a BSR? This will define Bitcoin’s price path over the next year or longer.
There was this Reuters article on November 21st. You should read the whole thing –
The article expressly states that the newly formed crypto council would “establish Trump’s promised Bitcoin reserve”. Is that just referring to not selling the seized BTC the US government already has, or is that talking about buying 200k BTC a year for five years? It’s a big difference in my mind. I think the market is already taking it as a given that Trump won’t sell the ~200k seized BTC the government currently has. I think that’s in price right now. But I also don’t think it makes that much of a difference to price, because I don’t think the market was “dragging” because of a future US government supply overhang. I don’t think the market really looks forward that much on that BTC supply coming to market. The market just waits until you see the BTC move on-chain, then price drags ass for a few days or weeks, then it’s over until next supply moves. So when you remove “selling seized BTC over the next few years”, I don’t think that really bumps price much, cause it wasn’t in there to begin with.
But the US government TWAPing a million BTC over five years? That’s not in the price here, or at least not much. It’s so wildly, stupidly bullish that you almost sound silly talking about it seriously. But it is real, and it could happen. And if it does, I think you would get a very swift move up in price. If the US government were to move forward with BTC purchases for a strategic reserve (likely by legislation but there is a chance you could do it with executive order), other nations around the world, both major and minor, would likely front run the US in purchasing BTC. It would spark something like a sovereign bidding war for Bitcoin. In fact, we MAY have seen some of that front running this past month. Regardless, it just doesn’t make any sense that the US would say “we’re going to TWAP a million BTC over the next five years and hold it to strengthen the dollar” and the rest of the world would just not do anything in response. That makes no sense.
But what would the path look like from here to there – “there” being the BSR legislation passing and being enacted? Will we get a “Crypto Czar” named in the coming weeks and that person makes a public statement that they will push for a BSR? Will you get confirmation from Bessent that he is in favor of the BSR as well? Will Trump make a statement that he is supportive of the BSR? Will you start seeing relevant committee chairs making public comments in support of the BSR?
If you get some combination of the above, I think BTC price will teleport from $100k to $250k quickly – over a matter of weeks or a few months. Mind you, under most any circumstance, it takes TREMENDOUS buying power to take a $2 trillion asset to a $4 or a $5 trillion asset. Trump just won and Saylor bought $12bn and the ETFs bought $7bn and whoever else bought however many other billions and Bitcoin market cap went from $1.5 trillion to just shy of $2 trillion. So that gives you a sense of the sheer dollars that need to be coming in to BTC to move price aggressively with a market cap this large. That’s why, absent a BSR, my price target for BTC this cycle is probably in the $150ish range - it’s just gotten so BIG. But a BSR and a sovereign bidding war? That’s a different kind of backdrop entirely. Honestly, if the US government starts looking like its going to buy 1 million BTC, who would be selling?
I think that’s how you get a really aggressive move from $100k to $200k to $300k and beyond. Where does it stop? Bitcoin’s market cap is currently ~11% of gold. Would it make sense to go to half of gold with a BSR and a sovereign bidding war? I think that makes sense. That would be ~$450k BTC. Sounds crazy doesn’t it? But there’s a path to get there.
The path to an eventual BSR may be a slower burn too. The Trump admin may very quickly establish a reserve of the 200k seized BTC the government already has. And then they may say they are evaluating adding more to it (likely by selling gold). And then it may slosh around DC for all of 2025, slowly building consensus amongst a majority of congress. Perhaps more states follow Pennsylvania’s lead and establish BSRs at the state level – and support for a Federal BSR builds from that angle.
What about the rest of crypto? Crypto in 2025 will likely be defined by a MUCH more favorable regulatory environment. Settlements and no action letters from the SEC and CFTC. Executive orders from Trump. Various edicts out of the Crypto Czar. I think that all happens rather quickly, and legislation gets nailed down over a longer timeframe, perhaps the next year or so, before passing in 2026. This is highly likely to open up crypto to more capital inflows, as the US regulatory risk becomes massively diminished. I would expect to see token structure changes start to occur in 2H-25 – incorporating security-like features that drive more compelling value accrual. Out with the worthless governance tokens, in with the yield-bearing, token burning pseudo-securities I think having US regulatory clarity will open the door for major traditional/Web2 companies to get involved in crypto – think GTA6 including crypto in its release, that sort of thing. There were plenty of rumors in 21 of these sorts of things – big companies on the precipice of getting involved in crypto in one way or another. Then 22 killed all that. I think we actually see some of those rumors come to fruition in the next 18 months. We will likely get more spot crypto ETFs. SOL and DOGE may be first up, but we may very get a whole bunch of them.
I’ve spoken about this many times here, but just to reiterate – Alts broadly have a “core utility” problem. There are some who would argue that an adversarial US regulatory backdrop has been A, and perhaps THE main driver of this “core utility” problem. And now that we’re going to clean up all those regulatory issues and have a nice clean backdrop for crypto, this “core utility” problem is going to magically vanish as numerous compelling use cases that gain significant mass adoption finally just appear. I would be wary of that view. A good regulatory backdrop is going to be helpful, without a doubt. But Alts broadly have a bigger issue than that. Outside of Bitcoin and stablecoins, the overwhelming majority of crypto projects are somewhere between solutions looking for problems and vaporware grift. I don’t think that fact magically changes with supportive regulations. But it’s certainly a great start.
Market Update – Sentient Memes (This Is What You
Should Be Paying Attention To In Crypto)
| Symbol | Nov | Oct | Q3-24 | Q2-24 | Q1-24 | YTD | Q4-23 | Q3-23 | Q2-23 | Q1-23 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BTC | 37% | 11% | 1% | -12% | 69% | 128% | 57% | -12% | 7% | 72% | 155% | -64% | 60% |
| ETH | 47% | -3% | -24% | -6% | 60% | 62% | 37% | -14% | 6% | 52% | 91% | -67% | 399% |
| XRP | 281% | -17% | 29% | -24% | 2% | 215% | 19% | 9% | -12% | 58% | 81% | -59% | 278% |
| BCH* | 45% | 6% | -12% | -44% | 121% | 68% | 33% | -24% | 117% | 16% | 157% | -75% | 6% |
| EOS | 113% | -14% | -11% | -48% | 30% | 11% | 45% | -22% | -37% | 38% | -2% | -72% | 17% |
| BNB | 14% | 2% | -3% | -4% | 94% | 109% | 45% | -10% | -24% | 29% | 27% | -52% | 1269% |
| XTZ | 167% | -11% | -11% | -43% | 40% | 68% | 47% | -15% | -28% | 56% | 39% | -84% | 116% |
| XLM | 467% | -6% | 8% | -35% | 9% | 306% | 15% | 1% | 1% | 55% | 81% | -73% | 108% |
| LTC | 48% | 4% | -11% | -28% | 44% | 41% | 10% | -39% | 21% | 28% | 4% | -52% | 17% |
| TRX | 22% | 8% | 25% | 1% | 14% | 91% | 21% | 16% | 27% | 10% | 98% | -28% | 181% |
| Aggregate Mkt Cap | 45% | 6% | -4% | -14% | 63% | 106% | 51% | -3% | 1% | 49% | 119% | -64% | 186% |
| Aggregate DeFi* | 41% | 0% | -15% | -21% | 47% | 39% | 72% | -5% | -5% | 50% | 132% | -77% | 581% |
| Aggr Alts Mkt Cap | 63% | -3% | -13% | -15% | 58% | 86% | 53% | -2% | -5% | 33% | 90% | -64% | 479% |
SOURCE: COINMARKETCAP AND COINGECKO. AS OF 11/30/24. BCH INCLUDES SV.
Last month, I talked about Terminal of Truths (“ToT”) and the memecoin GOAT here. Immediately thereafter, GOAT price went up 170% in a straight line (before pulling back ~50%). GOAT is currently a $750mm market cap and the value of ToT’s wallet is currently $27mm. That was not a typo. ToT currently controls $27mm of memecoins. Sit with that for a moment.
Additionally, what we have now is a full blown emerging crypto sector, the large majority of which has materialized in the last two months. This sector, Sentient Memes, is red hot - as hot as anything I’ve seen in crypto. Think DeFi Summer and NFT Summer. As I said last month, this is one of the most interesting things I’ve ever seen in crypto and many others feel the same way. To be clear, it is VERY nascent. And unfortunately like all of crypto, the overwhelming majority of these newly launched projects are vaporware grift. So don’t get it twisted, >99% of the sector is pointless. Worthless. A vehicle to separate speculators from their money. And even the handful of projects that are interesting are mostly at very early stages. But don’t let that dissuade you. There is nothing in crypto more worthy of your precious time than this sector.
The large majority of the sector is made up of AI Agents with memecoins attached to them. These AI Agents have a variety of goals and participate in a variety of activities. Many tweet. Some create TikToks. Some create music. Some trade crypto. There are many dozens of these, with GOAT and ToT as the godfather (it already has “Bitcoin of Sentient Memes” vibes to it); a handful at the >$100mm market cap size (Zerebro, AiXBT, Bully), a larger handful in the $25mm-$100mm range (Luna, MemesAI, Project89, Opus, Chaos, Pippin) and many dozens more in the <$25mm range.
It is difficult to create a fundamentals-based framework for investing in the memecoins attached to these AI Agents. You can look at the founder(s) who may or may not be doxed. You can listen to them on pods or in spaces. You can read their stated roadmap and evaluate the attractiveness of said roadmap and guess at the likelihood they will accomplish that roadmap. You can then take all that and compare it to their current market cap ($10mm, $50mm, $200mm), and make a call on the attractiveness of that market cap relative to the team and their stated goals.
Most of these Sentient Memes are generating some form of output currently, with promises of more output coming in the future. You can think about their market caps relative to the "impressiveness of their current output" and "expected impressiveness of their future output". And I do think its helpful to think about all that relative to ToT/GOAT, like a numerator/denominator kind of deal. Embedded in that analysis is a required view on GOAT – currently $750mm and was as high as $1.3bn two weeks ago. How likely is it that GOAT reaches $2bn or $3bn or $5bn market cap. Dogwifhat is currently $3.3bn, down from $4bn two weeks ago. Can GOAT get to those levels? If you think GOAT heads higher, than that shifts up your valuation expectations for all of the smaller Sentient Memes. If a given Sentient Meme currently has 5% the market cap of GOAT but you think it can grow to be 25% as viral as ToT AND you think GOAT can triple from here…well that looks like a buy.
Outside of the AI Agent x Memecoin vertical, you also have some platform-type plays that are also interesting. Virtuals on Base is the headline name here with a $1.4bn market cap, up 335% in November. It is a launchpad and marketplace for AI Agents on Base. Ai16z (not to be confused with a16z) is perhaps the most interesting platform play – a DAO holding the memecoins of many AI Agents launched on its associated Eliza open-source platform. AVB is another platform play with multiple pieces of a tech stack associated with it. Act I is an AI marketplace that mooned on an unexpected Binance listing. Vvaifu is basically the pump.fun for AI Agents launched on Solana.
The price action on this sector was truly bananas in the month of November. Many names up multiple hundreds of percent. They also do 50-75% pullbacks on a whim, so it’s not for the faint of heart. It’s also worth mentioning that almost none of these are listed on CEXs (although that may change soon). So you’ll need to download Phantom and fire up Jupiter and buy them on-chain. But I strongly believe its worth your while spending time on this sector. It’s not going away. It's likely going to grow bigger and louder. There’s a decent chance this will be THE headline sector of crypto for this cycle. And the return potential is juicy, despite tons of risk. This won’t be the last time you hear about them from me.
Closing Remarks
I went back and read my Closing Remarks from two years ago – written just a couple weeks after the collapse of FTX. Those were pretty dark days and rereading it I was transported back to the pain I felt at that time. But dark days don’t last forever and the sweet wouldn’t be as sweet without the sour. So we took our lumps and climbed out of a tough spot and made it out the other side. BTCs price is up 460% in the last two years – so that certainly helps.
2024 was a huge year for Bitcoin and crypto. YTD the BTC ETFs have seen $30.7bn of net inflows – a truly earthshattering number. Saylor added another $23.8bn to that. $54.5bn of YTD buying between the two of them, and that number will only grow bigger in December and into next year. Wow.
Crypto and Bitcoin were on the ballot in a major way in November, to an almost unimaginable degree relative to just a few years ago. As far as I remember, this was the last thing we heard from Trump about Bitcoin and crypto in his first administration-
My how things change! If that isn’t a cause for celebration, I don’t know what is. This setup, with crypto now enjoying broad and enthusiastic political support at the absolute highest levels, gives me great hope for our industry. Crypto is in the driver’s seat. Tons of capital, tons of eyeballs, tons of potential. What will we do with all of it?
"Fortune comes to a smiling house."
-Japanese Proverb
Travis Kling
Founder & Chief Investment Officer
Ikigai Asset Management
P.S.
Included below is an incomplete list of memorable tweets from the last month. Twitter is not investment advice and my views could easily be wrong. That being said, like it or not, Twitter matters for crypto. I have no interest in being a talking head for a living and babbling about on Twitter is a long way away from being a good steward of investor capital. However, this is a community with open-source software in its DNA, and participants want to crowd-source the truth. We are shepherds of this technology. Answers to fundamental questions about this asset class are not currently clear, so having a public platform to share your views with the community is important. After all, you’re helping shape the future :)
1. Ikigai Asset Management is the trade name for a collection of advisory and consulting businesses operated by Travis Kling, Anthony Emtman, and their team.
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