GSG Market Plus (GSGM+) – January 2025

Overview

We present our update of the GSG Market Plus (GSGM+) model portfolio for January 2025. 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 -8% in December, ahead of the -10% performance by the BGCI based on a similar rebalancing schedule. This compares with -3% BTC and -10.1% ETH in December.

For December, we expected the beginnings of a proper altseason to commence, and thus we reduced our exposure to both BTC and ETH as we believed higher returns would be found in altcoins in the near-term. While this did take place for some of our altcoin selections, the “Trump Trade” that began soon after Trump’s election victory in November tapered off in December for most markets. This was due to a combination of decreased trading into the holiday season, reduced liquidity, a hawkish turn by the U.S Fed in its latest meeting, and some profit taking into the end of the year after the huge upturn we experienced in November.

Nonetheless, we can’t ignore the clarity that was presented after the election in how the U.S. will now regard crypto moving forward. We expect the bullish sentiment to pick up once again as we approach Trump’s inauguration on Jan 20th, with market participants also returning from the holidays with their sights set on increasing their crypto exposure to varying degrees in 2025.

Thus, we’re maintaining a slightly underweight position in Bitcoin to stay overweight in altcoins. However, we are looking for the Pectra upgrade, scheduled for Q1, to revive some interest in Ethereum, so we’ve restored a neutral weighting to ETH.

We’ve also adjusted a few protocol, Defi, and RWA picks to allocate to one project that we’re seeing positive developments from in recent times (ENA) and are reducing/removing exposure to projects that have shown recent signs of underperformance (DOT) or will experience a temporary token supply increase in January (ONDO).

For all of our allocations and the reasoning behind our decisions, please refer to the following:

January Changes

Increasing Ethereum; Reducing Ondo; Adding Ethena; Removing Polkadot

Sector Views (weighting in relation to BGCI)

Bitcoin

Underweight @ 34.0%

• In light of our continued expectations for altseason to commence, we maintain an underweight in our Bitcoin position. This shift is to take advantage of the higher return potential that will be found in altcoins.

Ethereum

Neutral @ 35.0%

• We are returning to a neutral position in Ethereum from underweight to take advantage of potential renewed interest from the market due to the upcoming Pectra Upgrade (Q1).

Protocol

Underweight @ 20.1%

• We are maintaining a reduced Solana weighting, as the market downturn in Dec shifted interest away from the memecoin narrative. This reduced trading volume could stall price appreciation in SOL for the near-term.
• We are maintaining our positions in Avalanche and Near. We are removing Polkadot to reallocate toward more promising opportunities.

DeFi

Overweight @ 7.9%

• With Ethena’s rollout of a stablecoin backed by BlackRock’s BUIDL token and growing demand for high-yield driving USDe to the third-largest stablecoin, we are adding ENA to our portfolio.
• We will maintain an overweight position in the DeFi sector.

Infrastructure

Overweight @ 2.5%

• We are maintaining an overweight position in Chainlink due to its collaborations with major financial institutions to enhance blockchain interoperability and real-world asset tokenization.

RWA

Overweight @ 0.5%

• While we remain optimistic about the RWA sector’s long-term potential, we reduced our weighting in ONDO to mitigate potential volatility due to a significant ONDO token unlock event in January.

Please find below the January 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.