Great news for crypto investors, but terrible news for those of us in the proximity of an annoying bitcoin bro: Things have never looked this optimistic for the asset class.

Cryptocurrency has had an even better 2024 than Sabrina Carpenter. Bitcoin has climbed over 125% year-to-date, bringing with it ethereum, solana, and a host of other cryptocurrencies.

If your last impression of crypto was notorious fraud, Ponzi schemes, and of course, more fraud, you may be wondering how the industry managed to dig itself out of a bleak crypto winter.

Here’s how bitcoin went from being shunned by Wall Street veterans to becoming the best-performing asset of the decade.

• In January 2024, the Securities and Exchange Commission approved novel spot bitcoin exchange-traded funds after a decade of denying crypto asset managers’ application for this kind of ETF. What makes these funds unique is that they’re backed by actual bitcoin as opposed to just bitcoin futures contracts. Then in May, the SEC also approved spot ethereum ETFs. These funds have brought billions in new investments to the two most popular cryptocurrencies on the market. The largest bitcoin fund, the iShares Bitcoin Trust (IBIT) now has about $53 billion in assets under management.
• The re-election of President-elect Donald Trump in November was a huge boon to the industry, given the GOP’s warm embrace of cryptocurrency throughout Trump’s campaign. At the Bitcoin Conference this summer, Trump promised to create a national bitcoin stockpile and vowed to replace crypto-skeptic SEC Chairman Gary Gensler.
• Trump has already announced a slew of pro-crypto appointments, including former SEC commissioner Paul Atkins to lead the SEC. He’s also tapped former PayPal executive David Sacks for the role of “AI and Crypto Czar.”

A history lesson

It may have been a breakout year for bitcoin into the mainstream, but bitcoin is no spring chicken. The anonymous bitcoin founder Satoshi Nakamoto wrote his legendary whitepaper all the way back in 2008, and since then, bitcoin has been declared dead by the media 477 times. But it keeps coming back.

The big picture: Looking at bitcoin’s track record, it’s clear why investors have had a love/hate relationship with digital assets. It’s important to keep in mind that even many of the most bullish pro-crypto voices hedge their bets by making crypto a relatively small part of their overall portfolio.—LB

So, you’ve seen the headlines, done your research, and decided you want to invest in bitcoin. But how much of your portfolio should you put into the world’s most popular cryptocurrency? According to the chart above, it helps to compare the risk of investing in bitcoin to the risk of investing in the Magnificent 7.

“But from a portfolio construction perspective, the “Magnificent 7” group of mostly mega cap tech stocks is a useful starting point," Chief Investment Officer of ETFs and Index Investments at BlackRock Samara Cohen wrote in a recent note. "Those stocks represent single portfolio holdings that account for a comparatively large share of portfolio risk as with bitcoin. In a traditional portfolio with a mix of 60% stocks and 40% bonds, those seven stocks each account for, on average, about the same share of overall portfolio risk as a 1-2% allocation to bitcoin. We think that’s a reasonable range for a bitcoin exposure.”

Just 1% to 2% of your portfolio in bitcoin may not sound like much, but the cryptocurrency has no underlying cash flow that can help you determine future returns. Instead, bitcoin’s gains are solely predicated on its adoption. If it continues to gain ground in the world of finance, it will go up—but even with Donald Trump in the White House, there’s no guarantee of broader adoption. That’s why keeping your allocation relatively small is still the safest bet.

Bitcoin’s staggering rally is dominating the headlines (and the hearts and minds of loyalists).

But the best-performing cryptocurrency in 2024 isn’t bitcoin. Ethereum, the second largest coin by market cap, isn’t even in the top three performers, either.

There are thousands of cryptocurrencies out there in the digital stratosphere, most of which have dubious investment prospects. But when blue-chip cryptocurrencies rise, so does the rest of the pack, sometimes even outperforming bitcoin, ethereum, and solana.

So, what are the under-the-radar overperformers of the crypto industry?

• Sui: As the 18th largest cryptocurrency by market capitalization, it's understandable that you may not have heard of this specific token. But this crypto is packing a punch: It has jumped over 370% in the last 12 months, and 22% in the last month alone. Why? Like many smaller cryptos, the project has ascended as bitcoin has stepped into the spotlight this year. But another reason that Sui has performed so well is a September announcement that Circle will be launching its USDC stablecoin on the Sui’s Layer 1 blockchain network. If you’re confused by that sentence, it’s probably because you have a normal social life and appropriate levels of interaction with other human beings. Basically, this move means that more developers could build on Sui, growing the network’s reach.
• Dogecoin: It’s more likely you’ve heard of DOGE, the notorious meme coin that has surged over 240% this year and now has a $46 billion market cap. The election of digital asset-friendly Donald Trump buoyed all cryptos, but DOGE got an especially big boost from being the chosen acronym for Elon Musk’s newly proposed government efficiency agency.
• Shiba Inu: Shiba Inu has ridden DOGE’s coattails to the top in 2024, rising 107% in the last 12 months to a market cap of $12.7 billion. Its meme status was cemented since its inception in 2020 by posts from Elon Musk and Vitalik Buterin, the founder of ethereum, over the years. 

Despite their staggering returns, keep in mind that these obscure cryptos are even more volatile than their bigger peers like bitcoin and ethereum. Financial advisors are wary of the asset class in general (as the pros at BlackRock pointed out above), and investors who see huge gains in headlines and feel the pangs of FOMO probably shouldn’t bet it all on currencies inspired by memes.—LB

What do Jason Derulo, Hailey Welch, and an AI bot gifted $50,000 in bitcoin from Marc Andreessen all have in common?

They’re all using 2024’s crypto bull market to launch their own grifts cryptocurrency projects.

On the heels of bitcoin’s ascension to break above $100,000, a slew of worthless celebrity-touted meme coins, ponzi schemes, and other technically legal but just plain bad ideas have reemerged.

Case in point: Just a few weeks ago, the memecoin Fartcoin broke a market cap of $700 million, making it more valuable than some publicly traded companies. If you’re wondering what kind of person would create such a thing—no human has taken credit. The idea for Fartcoin reportedly originated on popular AI bot “Terminal of Truths” which is notorious for posting NSFW content on X. The AI agent was granted $50,000 from VC Marc Andreesen to create new tokens as well as a bunch of other expenses the bot suggested, including a billboard.

What do you meme?

But the memecoins dreamed up by humans aren’t any better investment ideas. The Hawk Tuah memecoin, created by internet personality Hailey Welch in early December, shot up in price before losing 95% of its value right after launching, while Jason Derulo’s token launch in July also quickly joined the graveyard of other failed worthless celebrity crypto forays.

The lesson: If you want to invest in crypto, stick to the blue chip classics. And don’t let any AI bot on X try to convince you otherwise.—LB