GSG Market Plus (GSGM+) – February 2024

Overview

We present our update of the GSG Market Plus (GSGM+) model portfolio for February 2024. This portfolio strategy aggregates our Research views across the broader market of listed cryptocurrency tokens and attempts to quantify how much we would overweight or underweight different segments of the cryptocurrency market while staying fully invested on a long-only basis. We then further select specific tokens we would allocate capital to, based on relative fundamentals and/or individual upcoming catalysts.? The GSGM+ strategy returned -0.3% in January, ahead of the -0.8% performance by the BGCI based on a similar rebalancing schedule. This compares with 1.6% BTC and 2.7% ETH in January.

For January, we expected upside momentum to begin to stall for Bitcoin once the ETF approval was passed in Jan 2024 because we had noted that the strength of momentum declined somewhat in December and we were wary of the ETF announcement serving as a “sell the news” event. January played out as expected for the most part, with Bitcoin remaining relatively flat to the end of the month while also forming a doji candle, which signals indecision in the market. For various technical reasons, we had identified $48k as a strong resistance, which came to fruition as Bitcoin finally exhibited a pullback of significance for the first time since this run began in October. Our overweights in BTC and ETH benefited from this move as it somewhat cushioned the blow of the retrace, whereas altcoins that had been outperforming fell harder.

For February, we expect to see further consolidation in Bitcoin as market participants consider their options in the near-term. While this does leave crypto markets susceptible to potential bearish news this month, we see enough technical support in the near future that we see this as a possible time to begin levelling into altcoins that exhibited strength in the initial run and have now come back down to attractive buy levels. We see liquidity eventually returning to these altcoins should markets steady over the next few months before the Bitcoin halving.

Therefore, we are reducing our overweight in both BTC and ETH in anticipation of continued market strength and liquidity returning to altcoins in the coming months and have introduced several new projects into the model portfolio. For our allocations and the reasoning behind our decisions, please refer to the following:

February Changes?

Decreasing BTC to neutral; Increasing ETH sector; Removing Store of Value sector; Decreasing overweight in DeFi; Adding a new sector - DePIN

Sector Views (weighting in relation to BGCI)

Bitcoin

Neutral @ 35.0%

• With the approval of the Bitcoin spot ETF, the anticipation and speculative interest that previously drove the market has now decreased.
• We neutralized our position on Bitcoin, foreseeing a potential shift towards other sectors.

Ethereum

Overweight @ 38.0%

• With several Ethereum spot ETF applications awaiting approval, a potential decision date is May 2024. This sector is likely to elicit increased interest similar to the pre-ETF approval period for Bitcoin.
• We are adding a position in Lido, which stands out as the leader in liquid staking.

Protocol

Underweight @ 15.0%

• Activity growth is being seen within the Cosmos ecosystem due to several completed airdrops involving holders of INJ, TIA, and OSMO. As the market expects more airdrops to come, we see interest increasing in this ecosystem.
• We are removing Cardano and initiating an allocation to Cosmos.

Store of Value

Underweight @ 0.0%

• Given that this sector is exhibiting low potential to draw market interest compared to others in the near term, we are removing all of our positions and allocations.

NFT & Web3

Overweight @ 2.3%

• Although this sector is lagging others, there is a noticeable uptrend in the floor prices of popular NFT collections and a rise in NFT trading volumes, signalling a revival in overall activity.
• We are maintaining our overweight position.

DeFi

Overweight @ 2.0%

• While maintaining our overall overweight position, we are increasing our allocation to MakerDAO compared to Uniswap due to MKR’s consistent revenue growth trend.

Infrastructure

Overweight @ 3.2%

• Chainlink, the biggest oracle network, and Filecoin, a key storage platform, are both expected to gain from recent increases in on-chain activity.
• We are maintaining an overweight position.

DePIN

Overweight @ 4.0%

• We are adding a new sector known as DePIN. The integration of blockchain and physical infrastructure is driving market growth and aligns with recent interest and developments in AI. We see high upside in this sector.
• We have initiated allocations to Akash and Helium.

Please find below the February 2024 revised target allocations for the GSGM+ model portfolio. Feel free to reach out to GSG investor relations and research departments with any questions or inquiries.