Which crypto sectors Milk Road PRO expects to lead by 2025

Transcript

GM good morning welcome to the milk Road show The Daily crypto show that's more exciting than finding a matching sock pair on laundry day I'm your host Jay Hamilton and today we are making bold predictions we're looking into the crystal ball to see the future of 2025 I can't believe how much Alpha is in this show here to guide us today is milroad co-owner and the most optimistic guy in crypto Kyle readhead Kyle I want to start with you guys on the milro milroad pro team have been doing a lot of work around predicting what's going to happen this cycle so that investors and those following milk Road can get the edge

that they need what has been the outcome of all this work you've been doing and how is it going to set everybody up that's listening today to capitalize yeah so we came up with this prediction that crypto is going to go to 10 trillion by the end of the cycle so somewhere around the Q3 Q4 of 2025 is our guess and we're not the only ones to say this I think there's a lot of analysts that are thinking we're going to go somewhere around there there's a bunch of reasons why we think this you can just look at the log chart which is what we have up here and when you look at when you get to October is 2025 that's kind of what makes sense at fair value so um there's a bunch of other reasons but we won't get into that today but we kept we sat

back and we were like okay when crypto goes to a 10 trillion doll Mark cap which for context it's currently sitting at 2.7 trillion today although today's been a terrible day in the market so it's probably something less than that but we thought well what does the crypto industry look like when we go from 2.7 trillion to 10 trillion that is like almost a 4X in the market cap of crypto gets 4X wealthier in this entire space what does that mean and so what does that mean for just like what matters in the space but also what does that mean in terms of market share of different sectors what tokens are actually going to get us from 2.7 trillion to 10 trillion is it all Bitcoin like Bitcoin just goes from a you know a two trillion dollar asset or one point whatever it is

right now to an eight trillion and the rest of crypto just kind of stays as is does eth take up a bunch of that does defi blow up like what happens and what does the markets look like when we are at 10 trillion rather than 2.7 and so we sort of backtrack from there and so the the research team got together and was like okay let's go through this and we've got 12 to 18 months and we're going to do about a 4X in the entire Market what's going to change in the market share and it gave us a lot of insights and why this is so important to understand is right now you can sit there and just like get excited about whatever token and just go buy it that's what a lot of investors do but instead this can create a really solid framework

to know where to allocate your Capital we know that crypto is going to go hopefully 4ex in the next 18 months so you're following the trend you want to be in the trend the trend is your friend is a common investment advice but we thought well why don't you go further down that get the crypto Trend but then what are the other Trends is defi going to be a trend this cycle is it going to be gaming is it going to be stable coins is it going to be like what are the things that are really really going to take off and whatever that is I want to allocate more of my Capital there not just crypto yeah crypto is going to do well but what are the things in crypto that going to do really well if that's once you can figure that out and

understand that then you get the trend of crypto and the trend of whatever sector you're deciding to put into and if you can figure out what's the sectors that are going to grow the fastest that's where you want to allocate your capital and so that's basically what came out of this research Tesson that that we all had okay so in today's episode the alpha you're G to give us is first off you're going to break down how the crypto industry will look at 10 trillion how much that will be Bitcoin how much that will be l1s how much that will be Defi and so on and so forth you're going to give us some price predictions for where you think Bitcoin l1s and defi are going to be by the end of 2025 and finally a bonus and what you really need to stick around to the end

here is you're going to talk about the risk reward profile of each of these assets in order to decide what your portfolio allocation should be and we're actually going to Kai's Kai's really he's opening up for us today folks I can't believe he's doing this this is usually milro Pro you got to pay for this but today he's going to let you guys see some charts and the last chart we're going to show in today's episode is the exact portfolio allocation that we recommend for the next 18 months okay Kai start us off with the breakdown between what we have right now now across all of crypto versus where you think it'll be in terms of market share by

2025 yeah absolutely so Bitcoin currently sits at about 50.4% we think that it's actually going to go down to 40% market share now to be clear that doesn't mean bitcoin's price goes down it still goes up it just doesn't go as as it doesn't go up as much as the other sectors in crypto so we think Bitcoin does really well it goes from you know it's currently a let me just pull it up here it's currently a $ 1.3 trillion asset we think it goes somewhere close to 4 trillion but again we think l1s and Defi and other sectors will go up more so it's market share by the end of 2025 and again don't take me exactly on the date of end of 2025 just whenever the cycle tops out our prediction is that Bitcoin goes down to about a 40% market share l1s we think do really really well

they're currently sitting at about 28.89% of the total crypto Market we think they actually go up to 35% so they're going to gain close to a little over 6% market share over the cycle which is is pretty good if we look into something like stable coins now this is not stable coin providers that's under defi this is stable coins themselves although we think stable coins do really well we've been saying that the difference is in a bull market something like eth or Bitcoin is going to go up a bunch more right if a bunch of people come in and they put 100 bucks each into Bitcoin then bitcoin's going to go up exponentially if they do that for stable coins it's just 100 bucks each right because it's a stable coin so it won't grow as much but will grow defi is one of the the ones that we think is the

best it goes from 3.74% to 7% now that's a 3.3% increase but that's about a double from what it is now in terms of market share so although l1s go from 29% to 35% which is a 6% difference the absolute difference is much different if that makes sense so l1's will go up but not as much as we think defi goes up some of the other big ones mem coins AI l2s we think they all do quite well and if you're looking at the here you can see them meme coins go from what is it 2.3 to 3.6 AI 1.26 to 2.5 and l2's 43% to 1.7% so that's sort of our predictions of where things go by the end of near the end of 2025 the top of the cycle

let's say and and I just want a quick question when you say l1s can you give us some specific tokens what you ever yeah so Bitcoin is also an L1 so it's basically all layer one blockchains that are not Bitcoin so this could be this is ethereum salon Aon Tron BNB go on like however many there are there's a bunch all of those put together okay awesome let's jump into some price predictions around the top categories that you have here so you mentioned Bitcoin first let's talk about where you guys predict Bitcoin will go by 2025 yeah so current market cap around 1.3 trillion we think it's probably going somewhere around 4 trillion uh and so that takes its market

cap if all works out as we say from 50 down to 40% but we think it's somewhere around about a 3X it does the cycle which is amazing a 3X in the next 18 months like an asset doing a 3X in the next 18 months would be incredible but what's really amazing is when we get to the end of this you're going to see that bitcoin's not even in the portfolio that we're going to suggest to you guys so that's really that shows you everything in this portfolio We Believe has higher than 3x so yeah wow well at this point too when you're in a bull market in crypto you don't want your benchmark to be USD I'm not trying to beat USD I can beat USD in anything in a bullmark I can literally put my money in any stock in any crypto in whatever commodity it's

going to beat USD what I'm trying to do is beat you know the least risest asset in what I believe is the best trend which is crypto and so Bitcoin which is the least risk I want to beat Bitcoin that's my Benchmark and so I don't want to buy Bitcoin because that means I'm not going to beat it I want to buy things that I think will beat it which is at this stage of the cycle as we've talked about a bunch in the show basically everything else and one of the big predictions within Bitcoin is the change in market share from currently being 50% to 40% so anybody listening to this might go whoa whoa whoa what do you mean Bitcoin is going to drop at 10% in market share can you explain quickly how you got that yeah so I mean if you look at every

cycle this always happens we could actually get the chart up on on screen here but if you look at the Bitcoin dominance chart it goes up during bare markets right because it's the least riskiest so people usually put their money in there and early stage bull markets it's why we're sitting about 55% I think right now and then when bull markets come in the second phase of bull markets when kind of risk on happens Bitcoin dominance goes down so again the price of Bitcoin still going up it's just its percent market share goes down because things are going up more than Bitcoin okay so this is not unusual for this to happen very happen okay great let's go to l1's what do you predict for l1's yeah so l1's currently said about 780 billion most of that a large sum of that is ethereum which I think is

somewhere around 500 billion again most of these numbers are probably down bad because we're down so bad in the last few days but anyway we think that that goes up to 3.5 trillion now that's all the L1 sector not just ethereum to be clear uh and so that's about a 4.5x in the L1 token sector by the end of this cycle which is a pretty big change right it's 6.1% it's a lot of inflows it's 2.7 trillion change that's really really big we do think that the bulk of that comes from about 2 to 4 blockchains it's not going to be evenly spread so probably your ethereum Salas and maybe two others kind of really grab a lot of that value but we think most of it comes from the bigger ones and what do you think in terms of price predictions for ethereum

I know you had that in this report as well yeah so specifically for ethereum we think it can go anywhere above 10,000 we think it shouldn't have troubles doing that how high it goes I don't know we kind of have a big range so it could be anywhere from like let's say 10 to to 20K it would be crazy if it got that high it's not really my base case but you know somewhere around 10 seems pretty right for me if you're taking into account ETF inflows and if what we think like especially if when we talk about the other sectors if all of those do come into fruition and defi gets as big as we think it is and stable coins grow most of that's happening on Ethan salana and so we think it only makes sense that these tokens are going to have to go really big as a result of

that okay great let's go to defi what do you think happens with defi in the next 18 months yeah we'll make this the last sector of them all because we think we think defi is probably the best risk reward you have right now especially in this moment the fundamentals of defi are stronger than they've probably ever been they're generating so much revenue I think if you combine all the defi protocols together right now they're bringing in about a billion dollars in Revenue annualized which is a beast and yet they are more undervalued than they have been ever basically in their history because they all launched like last cycle and then everything went nuts out of the promise of what defi was going to do then we had this huge pullback this whole huge bare market and so they all got so overvalued and their

fundamentals get better and better and better and yet their tokens have not moved a ton and so we think the current market cap of defi is 101 billion and we think that goes to 800 billion which is pretty massive that's 8X in the next 12 to 18 months and again remember that's an 8X of the entire um market cap we think certain projects within that are going to do much much better than that I've talked about maker on the show a bunch where we think it's going to do a 20x so that's going to be a big part but think of maker right now is worth two billion so it's going to go to 40 billion right but there's still so much more to make up from this now one thing to understand of this 101 billion market cap for defi a large chunk of that is

just liquid stake tokens so like your staked eth which is not a it's not an investable asset in the sense that it's not like it's not investing in Lio the thing that creates staked eth it's just a derivative of eth right that has some yield to it so defi is actually much smaller than it appears in this because I think it's about 80% of the that market cap just comes from these like liquid tokens basically and let's be clear here when you talk about defi you're talking about this perspective of not suggesting that our listeners go and use defi that they can if they'd like but more so just that the one of the best investment risk reward investment opportunities that you see over the next 18 months is in these dii top top tokens of these protocols

yeah and I wouldn't be using these tokens to far more apy like you don't need three or five or 10% apy on a token that might 20x in the next 12 18 months that's just additional risk for absolutely no reason in my opinion the reason why we think these assets are going to do so well one is they're extremely undervalued versus most tokens in the space they have fundamentals like real revenues and there is I mean at least in Maker's case it's already buying back tokens right so it's taking that revenue and doing something to bring value and ACR value to the token and a bunch of these D5 projects can do this and and so they have the tokenomics that just like no other sectors have like l2s me coins they don't have this kind of stuff then the other thing is as regulatory issues kind of clear up

there's a lot of money that wants to come and use this stuff that can't it wants to get on chain and use you know a and maker and whatever else but it just can't and so the moment that that thing happens which we think is going to be a big part of this cycle and getting to this 10 trillion I think a lot of that Capital goes into these assets or into these protocols okay so now that we understand which sectors are going to do well over the next 18 months that's not the only perspective to make investment decisions from there's other perspectives to make investment decisions from and one of the ones that you guys dug deep into is risk reward can you talk to us about how you analyze risk reward over the over the next 18

months and broke it down by sector yeah absolutely so the key thing here on risk reward is if you were to look at the chart that we showed at the very beginning you see that memecoins is actually going to perform the best out of anything right and in terms of like absolute returns and yet memec coins are like AI kind of thing right but the thing is is that they have a lot more risk associated with them so the chance of you actually getting it right and capitalizing on that upside is actually very slim so even though the results could be a 100x the chances of you getting that 100x is very very low it's actually a much greater chance that you're going to get a zero X whereas defi or l1's where there's maybe 20 L1 tokens and that thing's going to four and half X well you've got a pretty good

chance of getting the upside to that right like maybe it's like if you invest in five out of the 20 you've got basically a 25% chance you know and whereas with mem coins there's thousands and thousands of them so how do you know which one's going to make it so there's a few ways to figure out risk reward it's not just about the amount but first is just market cap right things with lower market cap size are way more volatile and you don't know if they're actually going to make it or not we know that bitcoin's going to make it it's been here forever it's already a trillion dollar asset so the risk on that is quite low now the reward is not as high but a 3X is still really good if you compare a risk reward from any other asset in the world but something like a

meme coin where the market cap is Tiny right now that you got to weigh that into the amount you're going to allocate to it yes it could outperform everything else but it doesn't mean it will right and so there's the market cap size there's the amount of assets that you can invest in as I said mem coins there's thousands of them l1s D5 there's a much smaller amount it's much easier to get it right and capitalize on that upside and then there's just like the existential risk there's like the smart contract risk right there's the rug risk uh that you have in memecoins that you don't have a rug risk in Bitcoin per se right you do if you put Bitcoin in like a lending centralized exchange or something then all of a sudden you add some risk to that but again you can invest in something like Bitcoin which

is the lowest on the risk reward as you can see from this chart and you can get some reward and the risk is much lower because higher market cap there's just one Bitcoin and there's no smart contract risk to own Bitcoin same with holding eth Etc there's no additional risk to holding those those assets as there is to hold something like defi defi has smart contract risk there's the protocol itself there's the the token itself which is an erc20 or SPL token on salana those have risk those tokens can get whitelisted eth cannot get whitelisted from regul from Regulators right so there's a lot of different risk you need to weigh into this because what would be the worst is you buy you know a bunch of defi tokens you think are going to do well but a couple of them like tornado cash gets whitelisted and all of

a sudden no one can use it and you miss that upside right and so understanding this risk reward is just so important uh and so find the trend and we think the trend is l1's Defi and there's some l2s you know AI sure but then look at risk reward and allocate accordingly towards that okay so now that we understand risk reward we understand market share broken down by sector for project projections for the next 18 months this all leads to the main question of the day and the thing I think all of our listeners are probably super excited to hear which which is how does this impact your portfolio allocation yeah so when we kind of take into account you know the potential upside of these sectors plus

the risk reward the the best bang for your buck right now is l1s right you can grab a four 5x and it's I don't want to say easy nothing is easy but it's a lot less risky than anything else and so a large percentage of our of our portfolio is in l1s right and in fact what we have on the chart here is we have a pie chart just like an example portfolio allocation that you could use about 76% is in l1's then we've got 16% in Defi and then we sort of go down the risk curve a little bit which is 5% in l2s 1.5% AI 1.5% gaming now this doesn't include Bitcoin it doesn't include Stables why is that because of where we are in the cycle so we're not saying never hold Bitcoin we're not saying never have a different percent allocation like we have set up here we

just think in terms of where we currently are in the cycle Bitcoin probably doesn't make the most sense because it's reached a limit where we think the best upside is in the other l1s we think it's their time to shine we think defi just right now is very very undervalued and so for at least this cycle it makes sense to be holding a large basket of those and then kind of the list goes on from there now that will change right at the end of the cycle as we get closer to 2025 and the end of 2025 closer to that 10 trillion doll market cap this is not what our portfolio will look like we will have a lot more stable coins we will have a lot more Bitcoin most likely we'll see where things go and a lot less l2s AI gaming even defi we will be probably out of

most of those and again we're not going to wait for 10 trillion to hit we'll be getting out of those before that happens because we don't know if it's actually going to hit 10 trillion again these are just predictions these are all numbers that allow us to have a thesis right when I can have a thesis to go okay 76% l1s now we can go look at the l1s and basically analyze each project and go well of that 76% how much do I want that to be of eth how much of salana how much of maybe ton or whatever right but at least I have a framework to keep sort of going one layer lower if I just sort of go I like eth I'm just going to buy some eth well it's like how much of eth you know what I mean like how does that fit

with the rest of my portfolio and this is where I think a lot of people get lost and so when you can sort of Peel back layers and find what are the best performing Trends and then start to allocate within those and have a framework of like how much that's going to be it just simplifies investing so much right and again I don't think we get every project that we invest in right I don't even think we'll get every sector right but because we've allocated because of risk reward there's a good chance we're going to do well no matter what right maybe l2s all die and gaming never has its cycle well that's okay right we're heavily allocated to other things that we're pretty sure l1's are going to as long as anything any use case succeeds in crypto l1's will do well right so the risk there is so low

and then defi you think of is like it's the backbone of any Financial system so again if l2s are going to work if AI is going to work we need the ability to swap we need the ability to take leverage and take out loans Etc and so like as long as something works defi is probably going to work and so are l1s and so again that helps us build our base case and understand where to allocate Capital incredible Kai my final question for today within the L1 and the D5 bucket since those are the two biggest buckets of this portfolio allocation can you give us an idea of would you hold one L1 token and one dii token would you hold you mentioned a basket how big of a basket how would you think about that and if you want to mention specific token I'll give you

bonus points and I know the Milkman will give you a high five too you know I love my bonus points um a good question I think um the way that I typically look at it for most people so like for example we have a team we can keep an eye on more projects than most people can if you're a single investor it doesn't make sense to go and buy all 20 all ones there's probably more than 20 ones I don't know how many there are but it doesn't make sense to that because you have no idea how to keep up with all 20 of those are they all still shipping products are they all still seeing users like are they all still doing well you have no idea same with D5 there's even more than 20 there's and not only that there's you know however many across different

chains how you going to keep up with that so my first advice for this is like less is more what you want to do is build conviction like do your research find the assets that fit the profile of this so Defi and l2s look for the ones that are undervalued look for the ones that you think of product Market fit that have the potential for token BuyBacks that can drive demand for this token and allocate into those how you're going to do that I can't really say but I would say less is more like don't have more than five l1s don't have more than five D5 projects and honestly I'd probably have less than that and so like two three maybe four l1s is good enough and then like defi maybe five and again I'm just pulling these out of my ass I'm not saying this is like an exact science

it's just most people go oh Defi and they go and just spread into like 20 30 40 defi projects and it's like look that's not going to go well for for you right how are you going to know when to sell that Pro that project you have no idea you're just gambling at that point and so build conviction I really like maker so most of my defi allocation is in maker personally right now there's some other ones I like but I'm less like I'm really really focus on maker and a couple other projects I'm not trying to spray across every ecosystem like I really focus on ethereum and salonic because I think those are the big ones right now I'm not going and buying D5 projects in avalanche I don't know anything about Avalanche right like I'm not paying attention to that or this random other chain there's so many

chains like on Cosmos like I'm not in injected defi or whatever you know because it's just too hard for me to keep up with so less is more when you're investing okay what is coming up from the milk Road pro team what else can we expect to see in the next few weeks so the two that we have actually there's three that I can say so the next one that's coming up I believe is a breakdown of defi so actually the exact the exact discussion we're having we're breaking down the sectors of defi so we're actually pulling back one layer so right now we pulled back the sections or the sectors of crypto now we've pulled back the sectors of defi right and all that there's lending there's like there's staking and so on and so forth so and then we talk about how to

allocate to that which is very very interesting so if you want to keep pulling back layers highly recommend that then we have a report on salana and what's going on in salana there's been a lot of questions there and then the other one we've been we've been working on is how to value a token so I talk a lot about like look for the undervalued tokens well how do you actually do that and that's one thing we're going to look to create a bit of a guide for there's there's no perfect way in crypto that's for sure but we're going to figure out a few different ways that you can use in formulas to kind of get a good valuation of of tokens right on can't RIT to read those Pro reports and I'm sure you guys listening are the same if you're not already a milk Road Pro member I think

you're going to want to go pro when you saw today's episode and everything that we shared this stuff comes at you every week these charts these analysis and this guiding helping you figure out how to capitalize and make the most money in this cycle thank you so much oh you got a final thought you want to share I was just going to say don't do this cycle alone it's a once- in a-lifetime Opportunity the upside is massive why would you do it alone right when you can do it with a team in a community I mean not only do you get reports every week you're in a Discord with a thousand members all talking and sharing about these charts and these ideas Etc and actually you can ask me and the research team right in there like why wouldn't you take advantage of that it just it

makes no sense it makes no sense that's that's all mic drop right there I might be a bit biased but you know no but it's true need an edge and the way you get an edge is with the community and so whether it's with us or with somebody else everybody listening to this just make sure you have a community a Discord group a telegram group somewhere where you can talk and ask questions and share research and get that edge make sure you have that edge because otherwise you're going to miss out on the biggest wealth opportunity of the next decade that's for sure Kai thanks so much for joining us again today got it thank you for listening to milk Road radio the easiest path to get smarter about crypto if you like this episode share it and hit hit subscribe or follow so you don't miss

out on the next one there's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh and if you're willing to step up your crypto investing game then we'll leave a link to milk Road Pro as well your number one resource to help you invest successfully in crypto one final note this podcast is for educational purposes only and nothing we say is financial advice crypto is risky so you should never invest more than you're willing to lose thank thank you friends and we'll see you in the next one