Crypto Market Update

Earlier this week, the crypto market declined sharply before bouncing back, with Bitcoin dropping over 15% and Ether experiencing its steepest decline since the FTX collapse. This selloff, fueled by broader economic concerns and geopolitical factors, increased market uncertainty.

Curious whether these events triggered any significant shifts in crypto funds’ strategies, I reached out to leading crypto investors managing liquid and hedge funds to learn about their plans moving ahead.

Continued Focus on Fundamentals

Interestingly, despite the market’s recent turbulence, several crypto funds continue to focus on fundamentals, with a strong bullish stance on Solana (SOL) and the DeFi sector. Joe McCann, founder, CEO, and CIO of Asymmetric Financial, shared that his firm, managing two liquid funds with 9-figure and 8-figure assets under management (AUM) respectively, remains invested in Bitcoin while overweight on Solana. “We have owned exactly zero ETH all year and see absolutely no reason to own it going forward,” McCann said. “The relative value of SOL vs. ETH has just broken out to a new all-time high, validating our thesis that SOL will continue to radically outperform ETH.”

Syncracy Capital’s Insights

At Syncracy Capital, co-founder Ryan Watkins echoed this sentiment, highlighting Solana’s undervaluation compared to Ethereum. He noted, “Solana now rivals Ethereum across most meaningful metrics yet trades at 1/5 the valuation.” Watkins expressed optimism about Solana’s ecosystem, claiming it is similarly “mispriced” compared to Ethereum’s ecosystem, with a few protocols generating $10 million to $50 million in earnings, growing 100% to 1000% year-on-year and trading at S&P 500 multiples — a fraction of their peers on Ethereum.

Watkins pointed out the DeFi and infrastructure sectors, indicating that Syncracy is observing these areas generating 8-9 figures in earnings and growing triple-digit percentages year-on-year. “We are very bullish on these category-leading, cash-flowing assets,” he said. Syncracy manages one liquid fund with an AUM of 9 figures.

Multicoin Capital’s Commitment

Similarly, Multicoin Capital’s managing partner Kyle Samani reaffirmed the firm’s commitment to Solana while expressing increased confidence in decentralized physical and virtual infrastructure network projects (DePINs and DeVINs), alongside stablecoins.

Maven 11’s Outlook

Maven 11’s portfolio manager, Ruben van den Eshof, pointed to a global interest rate easing cycle as a catalyst for stablecoins and DeFi growth. He mentioned that, with more rate cuts expected, the stablecoin market is likely to grow further, benefiting DeFi significantly. Maven 11 is positioning itself accordingly, allocating to stablecoins like Maker and lower-cap DeFi tokens such as Maple Finance.

DeFiance Capital’s Strategy

DeFiance Capital’s founder, CEO, and CIO Arthur Cheong shared that the firm’s focus has 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 added. However, DeFiance has reduced its exposure to the crypto-AI sector due to the need for more tangible growth and validation for higher valuations. DeFiance manages one liquid fund with an AUM of “high 8 figures.”

Pantera Capital’s Broader Focus

Pantera Capital’s portfolio manager, Cosmo Jiang, emphasized the firm’s continued focus on fundamentals, particularly in blockspace, DeFi, DePINs, and AI. Investments have been in Solana, Toncoin, Hivemapper, Geodnet, Near, and Bittensor, Jiang stated, reflecting a broad interest in diverse sectors. Pantera manages a combination of active versus passive and open versus closed-end vehicles, with an aggregate AUM of over $1 billion.

Founders Fund’s Strategy

Finally, Joey Krug of Founders Fund detailed his increased personal allocations to “blue-chip” DeFi assets, including Uniswap, Fantom, and Akash, each with promising mid- to long-term catalysts. While his ETH exposure remains high, Krug has reduced his Bitcoin holdings, primarily because he believes altcoins have relatively bottomed out versus Bitcoin, presenting a good opportunity to increase exposure.

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