Weekly Alpha #30 - 5 Altcoins You Must Watch in 2024 👀

Latest DeFi Alphas Delivered in a Concise Newsletter.

Dec 29, 2023

Welcome to the latest edition of Weekly Alpha.

Every Friday, I deliver insights on the cryptocurrency market, emerging projects, macroeconomic trends, and DeFi directly to your inbox.

In this edition of The Weekly Alpha:

🗞️ Weekly DeFi News Digest
👀 5 Altcoins You Must Watch in 2024
📈 Market overview

Your Weekly DeFi News Digest 🗞️

In this section, I highlight the week's most impactful DeFi news. This way, you can bypass the chatter on Twitter and concentrate on the essential updates.

Is ETH Waking Up? Peter Brandt Removes Short Position as ETH/BTC Bounces
SEC Fines BarnBridge DAO Founders For Offering Unregistered Securities
Blockchain Sleuth ZachXBT’s X Profile Goes Back to Offline After Briefly Flipping On
Inscriptions craze proves stark contrast between Ethereum rollups
Kyber Network axes workforce by 50% one month after $49M exploit
New protocol launches for cross-chain trading of inscription tokens
Lido Dominance Recedes Despite Blast TVL Climbing To New Highs

5 Altcoins You Must Watch in 2024 👀

I believe 2024 will be an excellent year for altcoins due to several key events. These include the Bitcoin halving, the potential introduction of a Bitcoin ETF, and the Ethereum Dencun upgrade, among others.

Although I typically adopt a conservative, long-term investment strategy, I have begun accumulating altcoins in anticipation of the upcoming bull market. These altcoins are intended for my mid-term holding portfolio. My plan is to reinvest any profits from these investments into other ventures, rather than holding them for the long term.

OSMO 🧪

Osmo, in my opinion, is poised to be a top performer in 2024. As the premier decentralized exchange in the Cosmos ecosystem, Osmosis has demonstrated considerable strength, particularly towards the end of 2023. Given the rapid growth of the Cosmos ecosystem, I believe Osmo could be a strong addition to my portfolio.

Recently, they have implemented a fee-sharing mechanism, redistributing the fees generated by Osmosis to its stakeholders. This move is highly promising, especially considering the increasing activity and airdrops occurring within Cosmos.

Additionally, as evident in the chart provided, there has been a significant spike in Total Value Locked since the end of October, indicating growing interest and investment in the platform.

Overall, I consider Osmo to be an excellent choice for investors who are bullish about the Cosmos ecosystem's future. Its strong performance and pivotal role in the ecosystem suggest it could be a valuable asset for those looking to capitalize on the potential growth of Cosmos.

ETH 🦇🔊

For some, my bullish stance on ETH may seem either obvious or misguided, but let me explain my reasoning. As we entered 2024, the Denali upgrade was anticipated, bringing with it significant EIPs (Ethereum Improvement Proposals):

EIP-1153: This proposal aims to reduce fees for storing data on-chain, enhancing block space efficiency. This improvement is crucial for optimizing Ethereum's blockchain and making it more user-friendly and cost-effective.
EIP-4788: This EIP focuses on improving designs for bridges and staking pools. This enhancement is vital for Ethereum's infrastructure, especially in terms of security and scalability.

Both upgrades align with Ethereum's Rollup-centric roadmap, reinforcing my belief in Ethereum as the preeminent settlement layer for Layer 2 solutions. This positions Ethereum strongly against other blockchain networks.

On social media, particularly Twitter, there's a trend where influencers compare DEX volumes on Solana and Ethereum. However, this comparison misses a crucial point: with L2 solutions settling on Ethereum, it's more accurate to look at the total DEX volume across both Ethereum and its Layer 2 networks, rather than just Ethereum alone.

Another key aspect is Ethereum's transition to a net deflationary model. This change, primarily driven by the EIP-1559 mechanism, means that more ETH gets burned as network activity increases. If we enter a phase of high market enthusiasm and activity shifts increasingly to L2s, this burning mechanism could lead to even greater deflationary pressure on ETH, potentially increasing its value.

In summary, these developments and Ethereum's strategic positioning make it a strong contender, justifying my bullish outlook on ETH.

OP 🔴

As I've mentioned, Ethereum's roadmap is heavily focused on rollups, and for the current bull market, my primary bet is on Optimism. Optimism stands out due to its retroactive airdrops for users and its rapid development pace. Although there are areas for improvement to reach a Stage 3 rollup status, I firmly believe they have one of the strongest teams in the ecosystem.

Most of my OP tokens were acquired through these airdrops, but I'm still gradually adding to my holdings. This strategy is proving fruitful at the moment, as the OP token has been one of the top performers in the past 30 days.

While there's room for improvement in the tokenomics, my strategy doesn't involve holding onto it through the next bear market. Therefore, I plan to continue accumulating OP tokens at a slow pace and aim to sell at an opportune time for a profitable exit.

VELO 🚴‍♀️

When considering Total Value Locked TVL, Velodrome Finance ranks as the second-largest protocol on Optimism. It's a project I frequently use, and I'm actively working to expand my holdings by creating LP positions and participating in voting. I have a medium-term investment locked to enhance my voting power and to earn additional rewards through bribing.

Believing in Optimism as a leading rollup, I see significant utility in the VELO token, such as earning a proportional share of swap fees generated on the platform and using it for bribes from other DAOs on the platform.

As Optimism grows, it's likely that Velodrome will also expand. Another promising venture in this domain is AERO, the Velodrome Finance equivalent on the Base Network.

swETH 🌊

When aiming to passively grow my ETH holdings, Liquid Staking Tokens are one of the best methods I've found. I'm not skilled in trading, but I still seek ways to increase my ETH stash. My portfolio includes various LST tokens, but I'm particularly fond of Swell Network's swETH. I choose it to support smaller projects, given that Lido dominates the market, which could pose future challenges for Ethereum. Diversification is beneficial in this context.

In my view, Swell is an excellent alternative, although it currently has fewer operators and validators than ideal.

By staking these tokens in Eigen Layer, I earn Swell Pearls, positioning me favorably for potential future airdrops on both Eigen Layer and Swell Network. This approach not only yields more ETH but also supports smaller LST initiatives.

Conclusion 🧠

I'm not into active trading or high-risk strategies, as I'm aware that they can lead to significant losses in the long term. My growth has been steady as a conservative investor, focusing on accumulating yield. I prioritize fundamentals over meme coins, which might seem unexciting, but I believe in doing thorough research and investing in what I truly believe in. I'm not here to oversell the ease of crypto investing; everyone has their strategy. While some might opt for high-risk, low-cap investments, that's not my approach.

This list isn't financial advice; there are considerable risks involved. It's all about finding a balance that lets you sleep peacefully at night.

I'd love to hear your thoughts in the comments about your top picks for 2024.

While I considered adding Bitcoin to this list, as it acts like a savings account for me, its value as a great asset, especially with potential ETFs and the upcoming halving in 2024, seems quite evident.

Weekly DeFi Market Update 📈

In this section, we'll take some time to examine useful metrics within the Ethereum ecosystem.

Stablecoin marketcap

A bullish metric to note is the significant growth in the stablecoin market cap over the past 30 days, observed on both Arbitrum and Optimism networks. Tether, in particular, has seen considerable expansion, which is positive news. This growth suggests that, in the near future, we can expect a substantial increase in liquidity within both networks.

On the other hand, Base losed 16% in terms of stablecoin market cap in the last 30 days, but there is much less activity due to airdrop farming on other chains and the fact that Friendtech is not as popular as it was.

Optimism Weekly growth ✨🔴_🔴✨

Shifting our focus to DeFiLama and the metrics for Optimism, there has been a notable increase in Total Value Locked and trading volume over the past 30 days.

Many of the top 10 DApps on Optimism have also exhibited impressive performance, including notable ones such as Velodrome Finance, Stargate, and Sonne Finance.

Conclusion 🧠

The Ethereum-centric roadmap is currently in full swing, with exponential growth in Total Value Locked on Layer 2 solutions, and tokens are performing exceptionally well. While this newsletter is purely informational and does not predict future token performance, my outlook on Layer 2s is highly bullish.

There is still considerable work to be done in terms of infrastructure to achieve the desired level of decentralization, but progress is rapid. Reflecting on the last bull market, Layer 2s were not nearly as popular as they are now, with a significant shift in activity towards them. This shift is beneficial for Ethereum, especially as gas prices are likely to surge if we enter an euphoric phase. The key question now is how well Layer 2 solutions will handle potential congestion, and it's hoped that we are prepared for this eventuality.

How are you positioning yourself for the upcoming bull market?

Yannis' DeFi Digest

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