By Fernando Walter Lolo, CAIA. Fernando Lolo specializes in alternative investment, cryptocurrencies, volatility, international finance, and global-macro trading and investment strategies.
The objective of this article is to provide the reader an overview on cryptocurrency (crypto) data and statistics as a kind of dashboard to help especially Chief Investment Officers (CIO) in Crypto Hedge Funds (HF), and also to portfolio and wealth managers, allocators, practitioners, traders, and investors.
The information and data hereby analyzed are based on factual information and data from past events in addition to analyses based on own calculations, assessments and best estimates by using the best suitable information, data, and research available as of the date of this report. This report has to be treated as a summarized version of a further continued analysis on the subject, a brief descriptive overview, and a work in progress given the fast-paced changing dynamics in the crypto industry as a different asset class. Further, it was written from a hedge fund CIO and investment/trading perspective only. Furthermore, this report focuses only on data, analyses, information, and relevant drivers that are related to crypto assets. Trading and investment strategies/tactics have not been addressed in this report since it was scoped to data analysis and a preliminary assessment only. This report and analyses are not financial or investment advice; the reader must always do their own research at all times, and is for informational, educational, and illustrative purposes, subject to updates and changes any time.
In the crypto space, there’s still a need to connect what is a global-macro (or world-macro) hedge fund approach and the crypto specifics by considering crypto a different asset class. These two worlds must be interconnected since they are correlated in high degree. In addition, we should note that crypto have volatilities that start from 100% p.a. and some group of specific tokens can reach above 400% p.a. approximately. Drawdowns, selloffs, large volatility spikes, high breakouts and break downs to name a few are the common currency when investing, trading, and conducting portfolio management in this space. The correlation and decorrelation between crypto and other asset classes are rapid, hence the fast-paced changes in dynamics, approaches, strategies, position, allocations, portfolio rotation/calibration, management, have to be rapid, active, and with active switches. All these make crypto trading and investing a different type of asset class. Therefore, cryptocurrencies should be treated differently by having a special treatment and a totally different approach than other asset classes.
This report has been structured in the following sections:
Global-Macro drivers to consider.
Bitcoin (BTC) past halvings and other cryptos/tokens overview, information, and statistics.
Some current crypto/tokens sectors and different categories with the largest market capitalization (MC) to consider today.
Portfolios by market capitalization (MC) and sectors/categories. Risks. Rotational portfolio management.
Thoughts for further consideration.
The sections are summarized below:
Section 1: Global-Macro drivers to consider.
Below is a list of Global-Macro specific topics that are on watch as of the date of this report that influence and have an impact in the crypto industry.
- Stagflation development. GDP growth and inflation status (2024-2028). Inflation (PCE, CPI). 1970s Dèjá-Vu, perspectives. Hedges and new asset classes such as cryptocurrencies given countries' adoption and worldwide evolution. FIAT Money, CBDC vs. Decentralized Finance (DeFi), staking, farming, and tokenization worldwide adoption. Cryptocurrency case and the realm about decentralization.
Interest rates. US Dollar. Global Central Banks.
Gold and Digital Gold (2024 onward - generational Transfer-Delegation(s) by maintaining both innovative
Evolution-Conservation-History/Evolutionary Transfer). Gold buying trends by Central Banks/Countries (2025-2028). Bitcoin as digital gold/safe haven (2024 onward). Oil (2024-2028).
Natural resources in emerging markets vs. demand from developed markets, and innovative industries/manufacturing. Arctic and Antarctic geopolitical agreements (North/South and East-West collaborations/alliances).
FED & other Global Central Banks rate's decisions. EU rate's decisions. Asia/Japan rate's decisions. Central Banks' catch-22 situation. Interest debt services given high interest rates scenarios and total debt levels; deficits (worldwide level).
Post-earning markets scenarios esp. 2024-Q4.
Bitcoin (BTC) post-halving scenarios, parabolic upside, crypto Bull Run, past halvings’ statistics, and altcoin season vis-a-vis past-halvings’ returns; given both post-halving performance in 2024-2025 and spot crypto ETFs approvals. Other cryptos/tokens and Blockchain innovations/upgrades.
Magnificent-7 stocks' upside potential (2025-2026).
Crypto & Blockchain as innovative investable sectors and a different asset class (2024-2026).
Climate change.
Agricultural commodities upside. Food inflation (2024-2036).
Elections worldwide esp. in the US (2024).
Geopolitical events (past, present, future). NATO/G7 vis-a-vis BRICs and G20 given new geopolitical reorganization/alliances.
Polarized societies, immigration issues/clashes, cross-border integration/misalignments. Politics. Country alliances. Elections.
Bonds issuance. Yield curve.
Thematic investing, rotation, economic cycle, different cryptocurrencies as new and different asset class/sector approach (e.g., Tokenization, RWA, AI, Runes, digital gold, other).
CAIA’s Total Portfolio Approach (TPA) considering SWFs, Family Offices, and Institutional Investors' investment forward-looking trends (2025-2034).
Crypto’s Long/Short ratio. ICOs.
Bitcoin dominance vs. Bitcoin price. Crypto total market capitalization including/excluding BTC/ETH.
Equity indices: S&P500, NASDAQ.
Spot Crypto ETF inflows/outflows.
Others.
Section 2: Bitcoin (BTC) and crypto information & statistics.
A. Bitcoin: the main Bitcoin halving phases could be summarized as follows:
Pre-halving: in the previous halvings, BTC has contracted between 20 and 35% on average. The deeper and longer the contraction, the higher the probability to reach bottom and starts a trend change; which increases rapidly. The contraction might take between 16 to 48 days on average.
After the contraction, a re-accumulation or consolidation phase happens based on history. In the past, it started just weeks before the halving event and ended months after the halving. BTC started to lateralize until it finished this phase with a price breakout (bo). In parallel, it is worth noting that the average pullback after a halving event averaged 20%. Now, BTC experienced retracements lasting between 10 to 40 days approximately before a halving. The downside or retracements could range between 10 to 30% on average. The longer BTC consolidated after the halving, the better switch and phasing into the parabolic upside trend.
Once BTC breakouts, a parabolic upward trend starts, where the price experiences a rapid growth that could last over one year based on historical data. As a reference, BTC has rallied for about 300 to 500 days on average after the past halvings. Acceleration kicks off and consolidates for about 6 months on average, to then decelerates and start lateralizing. It is worth noting that new innovations and events (tech, AI, crypto adoption, geopolitics) make the 2024 halving event (pre, during, and post) somewhat different from past halving events. It is important to consider these and also previous all-time high (ATH) BTC prices; as well as support/resistance and Chartism analyses.
B. Altcoin season phases that could be considered based on BTC dominance:
Accumulation: buying period after prices hit bottom.
Resurgence: big whales/institutional investors/funds accelerates their purchases attracting retail investors.
Lateralization: this often happens after Bitcoin halvings.
Uptrend: this entails a strong upward price move in both Bitcoin and Altcoins, including all market caps tokens like a parabolic move as described above.
It is worth noting that from phase 1 to 3, market progress and movements could be slow; but they ramp up big in phase 4. Indicators to consider are the inverse correlation between Bitcoin dominance metrics and Bitcoin price, the total market capitalization including and excluding BTC and ETH, and the market capitalization of the rest of Altcoins excluding BTC and ETH. In crypto, volatilities are above 100% p.a. only in BTC and ETH, and much more in other tokens.
Section 3: Some crypto/tokens sectors and different categories with the largest market capitalization (MC).
BTC ecosystem.
Layer 1 & 2 (L1 - L2).
Injective Ecosystem.
Smart Contracts.
Ethereum (ETH) ecosystem.
BNB Chain ecosystem.
SEC Securities/Tokens.
Solana (SOL) ecosystem.
Arbitrum ecosystem.
Optimism ecosystem.
Moondriver ecosystem.
Stablecoin.
Avalanche ecosystem.
DeFi.
Fantom ecosystem.
DWF Labs ecosystem.
Memes.
Rehypot hecated crypto.
NFTs & collectibles.
EigenLayer Ecosystem.
Real World Assets (RWA).
Polygon ecosystem.
Liquid staking derivatives.
Restaking.
DePIN.
Distributed computing.
ETH 2.0 staking.Metaverse.
Cardano.
Governance.
Polkadot ecosystem.
Gaming.
Toncoin ecosystem.
Near protocol ecosystem.
Decentralized exchange.
Binance launchpad.
Zero knowledge proofs.
Genrative AI.
Storage.
Modular blockchain.
Wrapped tokens.
Oracles.
Privacy.
Lending & Borrowing.
Yield farming.
Play to earn.
AMM.
Data availability.
Wallet.
IoT.
Harmony ecosystem.
Internet computer ecosystem.
Derivatives.
Aptos ecosystem.
Analytics.
Jump crypto.
SEI ecosystem.
Base ecosystem.
Gaming guild.
SUI ecosystem.
BRC-20.
TokenFi Launchpad.
Olympus Pro ecosystem
Inscriptions.
Parallel EVM.
Sports.
Communications & Social Media.
Others.
Source: Coinmarketcap (May 16, 20224)
Section 4. Portfolios by market capitalization (MC) and sectors/categories. Risks. Rotational portfolio management.
A. Rotational Portfolio Management
In general, portfolio rotation follows this pattern:
Investors starts a long position and accumulating Bitcoin (BTC) (buying more) until BTC dominance starts to decrease. This is when Altcoin season (Altseason) starts kicking off.
Then, they increase allocations in Ethereum (ETH), in BNB and/or in Solana (SOL) until the uptrend starts to lateralize.
Then, they increase their allocation in large market capitalization (MC) altcoins.
And after that, in mid and small market caps altcoins.
In case they want to take more risks, they consider MEME coins and micro caps (for instance those below $10 million in MC).
B. Risks
Although investing in crypto is risky, roughly speaking within the crypto space, some sectors/categories are riskier than others. Below is a list of cryptos’ sectors/categories sorted by its risks (from highest to lowest):
Presales/Airdrops.
Meme coins.
Low caps.
Mid caps.
Large caps.
Ethereum (ETH).
Bitcoin (BTC).
C. Portfolio by Market Capitalization (MC) & Sectors
Below there are examples of portfolio construction based on MC and by sector/categories divided by three different types of risk profiles.
1. Portfolio construction by MC
Conservative: 50% BTC, 30% ETH, 20% Altcoins Large Cap.
Medium: 40% BTC, 20% ETH, 20% Altcoins Large Cap., 10% Altcoins Mid Cap., 10% Altcoins Small Cap.
Speculative: 10% BTC, 10% ETH, 20% Altcoins Large Cap., 40% Altcoins Mid Cap., 20% Altcoins Small Cap.
2. Portfolio construction by Sectors/Categories
Conservative: 30% BTC, 30% ETH, 10% SOL, 5% L1, 5% L2, 5% Staking, 5% DeFi, 5% Privacy, 5% Generative AI.
Medium: 20% BTC, 20% ETH, 10% SOL, 10% L1, 5% L2, 5% Staking, 5% DeFi, 5% Tokenization/RWA, 5% Runes, 5% GameFi, 5% Generative AI, 5% DePIN.
Speculative: 10% BTC, 10% ETH, 5% SOL, 5% L1, 5% L2, 5% Staking, 5% DeFi, 5% Tokenization/RWA, 5% Runes, 5% GameFi, 5% Generative AI, 5% DePIN, 5% Governance, 5% Music, 5% Tourism, 5% BRC-20, 10% Metaverse.
Section 5. Thoughts for further consideration.
Thoughts for further consideration follow:
The link and connection between global-macro drivers and crypto dynamics are inevitable and also have to be considered a must to trade and invest in cryptocurrencies.
The speed of correlation/decorrelation with equities, gold, and other asset classes is fast.
Volatility is high; therefore, crypto should be considered a different asset class.
Buy & Hold might not be the best suitable strategy; rather, active portfolio management and a rotational strategy could be primer.
Diversification among other asset classes, and also, among different types of Blockchain technology sectors are also key.
For illustrative purposes, below is a chart with some statistics and data from the previous and today’s halvings:
Technical & Fundamental analyses, related crypto events, related global-macro events plus other drivers should always be factored in since crypto is a different asset class with its own dynamics. Timing and time also play big roles in this asset class. Therefore, predictions in crypto plays more as best estimates than a prediction. In general they happen, but in the crypto space it’s all about probabilities that change rapidly. Again, volatility is high.
In terms of portfolio management, it is active, very fast paced, and dynamic. You have to validate and invalidate strategies and tactics very fast while maintaining focus, speed, actionable knowledge on crypto dynamics and global-macro drivers, which are key. Investors in this space must do their own in depth research (DYOR), reviews, and due diligence, but more importantly, they must understand the asset class in full first.
As the saying goes, history doesn't repeat itself, but it rhymes.-
About the Author:
Fernando Walter Lolo, CAIA specializes in alternative investment, cryptocurrencies, volatility, international finance, and global-macro trading and investment strategies.
He founded Directional Alpha, which was first a private Hedge Fund, and thereafter, it converged into a consulting firm. The firm focuses on tail risk, volatility trading, hedging, geopolitical international finance, financial modeling, quantitative analysis, hedge fund strategies, financial crises, and global-macro events. Fernando went through a difficult thought process of traditional financial methods. His approach is unconventional.
He advised on international finance, Financial Stability Board (FSB), and G-20 related topics at the Ministry of Economy of Argentina. Prior to that, he worked in finance and alternative investment at the World Bank Group based in Washington, DC. Before that, he worked in finance in Latin America (LATAM).
Fernando strategized his specialization for a long period of time by following a "Mosaic" approach in different Ivy-leagues and other Institutions, which also included unconventional education. He holds an MBA, a Master in Finance, and Post-graduate Degrees in financial engineering, fund management, and strategy from Harvard University, Columbia University, Universidad Torcuato Di Tella, Universidad de Buenos Aires, and Johns Hopkins University. In addition, he is a Certified Public Accountant and holds the CAIA designation (Chartered Alternative Investment Analyst). During his career, Fernando worked in the USA, Emerging Markets, and Europe. www.DirectionalAlpha.com