After the crypto market turbulence, the focus of capital investment has shifted towards Solana and DeFi.

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MarsBit
08-12
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Crypto markets fell sharply earlier this week before rebounding, with Bitcoin falling more than 15% and Ethereum experiencing its biggest drop since the FTX crash. The sell-off was sparked by broader economic concerns and geopolitical factors, adding to market uncertainty. Curious as to whether these events have triggered a major shift in crypto fund strategies, I reached out to leading crypto investors who manage liquidity and hedge funds to learn about their plans going forward.

Interestingly, despite the recent market turmoil, several crypto funds continue to focus on fundamentals, taking a strongly bullish stance on Solana (SOL) and the DeFi space. Joe McCann, founder, CEO, and CIO of Asymmetric Financial, told me that his firm, which manages two liquid funds with nine-figure and eight-figure AUM, is still investing in Bitcoin while increasing its holdings of Solana. “We hold zero Ethereum,” McCann said. “I see absolutely no reason to continue to hold it in the future. Solana vs. ETH, SOL just broke out to a new all-time high, validating our thesis that SOL will continue to significantly outperform ETH.”

Syncracy Capital co-founder Ryan Watkins echoed this sentiment, highlighting how undervalued Solana is relative to Ethereum . “Solana is now comparable to Ethereum on most meaningful metrics, but trades at 1/5th of Ethereum’s price,” he told me. Watkins also expressed optimism about Solana’s ecosystem, saying it is similarly “mispriced” compared to Ethereum’s, “with a handful of protocols generating $10-50 million in revenue, growing 100-1000% year-over-year, and trading at multiples of the S&P 500 — a fraction of their Ethereum peers.”

Watkins also pointed to the DeFi and infrastructure sectors, noting that Syncracy has seen eight- to nine-figure gains in those sectors and triple-digit year-over-year growth rates. “We are very bullish on leading cash flow assets in those categories,” he said. Watkins added that Syncracy manages a liquid fund with nine-figure AUM.

Similarly, Kyle Samani, managing partner at Multicoin Capital, reiterated the firm’s commitment to Solana, while also expressing increased confidence in decentralized physical and virtual infrastructure network projects (DePIN and DeVIN) as well as stablecoins .

Ruben van den Eshof, portfolio manager at Maven 11, pointed to the global interest rate cut cycle as a catalyst for the growth of stablecoins and DeFi. He told me that with the expectation of further interest rate cuts, the stablecoin market is likely to grow further, which will greatly benefit DeFi . Maven 11 is positioning accordingly, allocating funds to stablecoins such as Maker and lower-market-cap DeFi tokens such as Maple Finance , van den Eshof said.

Arthur Cheong, founder, CEO, and CIO of DeFiance Capital, shared that the company’s focus has recently shifted to DeFi, citing its strong product-market fit and attractive valuations. “ Valuations in DeFi are at their lowest level since 2020 relative to the various metrics/traction we track, ” Cheong said. On the other hand, Cheong added that DeFiance has reduced its investments in the crypto AI space as more tangible growth and validation are needed to achieve higher valuations. DeFiance manages a liquid fund with an AUM of “high 8 figures.”

Cosmo Jiang, portfolio manager at Pantera Capital, stressed that the company will continue to focus on fundamentals, especially in the blockchain space, DeFi, DePIN, and artificial intelligence. Jiang said Pantera's investment areas include Solana, Toncoin, Hivemapper, Geodnet, Near, and Bittensor, reflecting its broad interest in different industries. Jiang said Pantera manages a combination of active and passive, open-end and closed-end investment vehicles, with a total asset management scale of more than $1 billion.

Finally, Founders Fund’s Joey Krug told me that he personally increased his allocation to “blue chip” DeFi assets, including Uniswap, Fantom, and Akash, each of which has good medium- to long-term catalysts. He said that while his ETH exposure remains high, Krug has reduced his Bitcoin holdings. “This is primarily because I think Altcoin have bottomed relative to Bitcoin, which provides a good opportunity to increase exposure,” Krug said.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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