In a week of sharp declines and subsequent recovery for the cryptocurrency market, Bitcoin dropped over 15%, and Ether saw its steepest fall since the FTX collapse. The selloff, fuelled by broader economic concerns and geopolitical factors, sent ripples of uncertainty through the market. Yet, amidst this chaos, some of the industry’s most prominent crypto funds remain firmly bullish on specific assets, particularly Solana (SOL) and the Decentralised Finance (DeFi) sector.
For Crypto Funds, Market Shaken but Not Stirred
As the dust settled from this latest round of market volatility, it became clear that not all players were ready to abandon ship. Despite the significant drops in value, leading crypto funds have maintained a focus on long-term fundamentals, with a strong belief that certain sectors within the crypto space are poised for continued growth.
One such believer is Joe McCann, founder, CEO, and CIO of Asymmetric Financial. His firm manages two liquid funds with assets under management (AUM) in the nine and eight figures, respectively. McCann’s stance on Bitcoin remains firm, but his enthusiasm for Solana is even stronger. “We have owned exactly zero ETH all year and see absolutely no reason to own it going forward,” McCann stated, emphasising Solana’s relative value compared to Ethereum. He pointed out that Solana’s performance against Ethereum has reached an all-time high, which he views as validation of his thesis that Solana will continue to outperform its larger rival.
Solana: The Undervalued Contender
This sentiment by crypto funds is echoed by Ryan Watkins, co-founder of Syncracy Capital, who also sees Solana as being significantly undervalued in comparison to Ethereum. Watkins highlighted that Solana now rivals Ethereum across most meaningful metrics, yet trades at just one-fifth of Ethereum’s valuation. According to Watkins, this presents a compelling opportunity for investors.
He also expressed optimism about Solana’s ecosystem, describing it as “mispriced” when compared to Ethereum’s, with several protocols generating substantial earnings and growing at impressive rates. Watkins revealed that Syncracy Capital, which manages a liquid fund with a nine-figure AUM, is bullish on Solana and expects it to continue delivering strong returns.
Beyond Solana, Watkins also pointed to the DeFi and infrastructure sectors, which he noted are generating substantial earnings and growing rapidly. Syncracy Capital remains very bullish on these “category-leading, cash-flowing assets,” positioning itself accordingly for the anticipated growth in these areas.
DeFi and Stablecoins: The Quiet Powerhouses
While Solana garners much attention, other crypto funds are also placing their bets on the DeFi sector and stablecoins. Kyle Samani, managing partner at Multicoin Capital, reaffirmed his firm’s commitment to Solana while expressing increased confidence in projects related to decentralised physical and virtual infrastructure networks (DePINs and DeVINs), along with stablecoins. For Samani, these areas represent significant growth opportunities within the crypto space, with the potential to deliver substantial returns in the long term.
Also, Ruben van den Eshof, portfolio manager at Maven 11, pointed to the global interest rate easing cycle as a key catalyst for stablecoins and DeFi growth. He explained that with more rate cuts expected, the stablecoin market is likely to expand further, significantly benefiting DeFi. As a result, Maven 11 is positioning itself with allocations to stablecoins like Maker and lower-cap DeFi tokens such as Maple Finance, which van den Eshof believes are well-positioned for growth.
Balancing Act: DeFi, AI, and the Future
Arthur Cheong, founder, CEO, and CIO of DeFiance Capital, shared that his firm’s focus has recently shifted towards DeFi, citing its strong product-market fit and attractive valuations. “DeFi is trading at the lowest valuation since 2020 relative to their various metrics/traction we track,” Cheong observed. This shift reflects a strategic move to capitalise on what DeFiance sees as a fundamentally sound sector that is currently undervalued. However, Cheong also noted that the firm has reduced its exposure to the crypto-AI sector, as it requires more tangible growth and validation to deserve higher valuations. DeFiance Capital manages one liquid fund with a high eight-figure AUM.
Pantera Capital’s portfolio manager, Cosmo Jiang, emphasised the firm’s continued focus on fundamentals, particularly in blockspace, DeFi, DePINs, and AI. Pantera’s diversified investments, which include Solana, Toncoin, and Hivemapper, reflect a broad interest in various sectors, with Jiang indicating that the firm remains committed to these areas despite the market’s recent volatility. Pantera manages a combination of active versus passive and open versus closed-end vehicles, with an aggregate AUM of over $1 billion.
Finally, Joey Krug of Founders Fund highlighted his personal investment strategy, which has seen an increased allocation to “blue-chip” DeFi assets, including Uniswap, Fantom, and Akash. Krug, while maintaining high exposure to ETH, has reduced his Bitcoin holdings, citing a belief that altcoins have relatively bottomed out versus Bitcoin, presenting a good opportunity to increase exposure.
The Final Word
Despite the recent market turmoil, the unwavering confidence of these crypto funds in the potential of Solana, DeFi, and related sectors suggests that they view the current volatility as more of an opportunity than a threat. Their strategies highlight a belief in the fundamental strength and long-term growth potential of these assets, even as the broader market faces challenges.
