Earlier this week, the crypto market experienced a sharp decline before rebounding, with Bitcoin dropping over 15% and Ether experiencing its steepest decline since the FTX collapse. This selloff, driven by broader economic concerns and geopolitical factors, increased market uncertainty. To understand the impact of these events on crypto funds’ strategies, insights were gathered from leading crypto investors managing liquid and hedge funds.
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Focus on Solana: A Top Pick for Crypto Funds
Despite recent market turbulence, several crypto funds maintain a strong focus on fundamentals, expressing a bullish stance on Solana (SOL) and the DeFi sector. Joe McCann, founder, CEO, and CIO of Asymmetric Financial, stated that his firm, managing two liquid funds with 9-figure and 8-figure assets under management (AUM), remains invested in Bitcoin while being overweight on Solana.
“We have owned exactly zero ETH all year and see absolutely no reason to own it going forward,” McCann noted. “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.”
At Syncracy Capital, co-founder Ryan Watkins echoed this sentiment, emphasizing Solana’s undervaluation compared to Ethereum. He remarked, “Solana now rivals Ethereum across most meaningful metrics yet trades at 1/5 the valuation.” Watkins also expressed optimism about Solana’s ecosystem, noting it is similarly “mispriced” compared to Ethereum’s ecosystem, with several protocols generating $10 million to $50 million in earnings and growing 100% to 1000% year-on-year, trading at S&P 500 multiples — a fraction of their peers on Ethereum.
Sol/Eth chart pattern
Source: Tradingview
Insights from Crypto Fund Managers on Solana and DeFi
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.
Ruben van den Eshof, Maven 11’s portfolio manager, 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, significantly benefiting DeFi. Maven 11 is positioning itself accordingly, with allocations to stablecoins like Maker and lower-cap DeFi tokens such as Maple Finance, van den Eshof said.
DeFiance Capital’s founder, CEO, and CIO Arthur Cheong shared that the 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 said. On the other hand, DeFiance has reduced its exposure to the crypto-AI sector due to the need for more tangible growth and validation to deserve higher valuations, Cheong added. DeFiance manages one liquid fund with an AUM of “high 8 figures.”
Cosmo Jiang, Pantera Capital’s portfolio manager, emphasized the firm’s continued focus on fundamentals, particularly in blockspace, DeFi, DePINs, and AI. Pantera’s investments have been in Solana, Toncoin, Hivemapper, Geodnet, Near, and Bittensor, Jiang said, 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, Jiang said.
Joey Krug of Founders Fund discussed 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, he said. “This is primarily because I believe altcoins have relatively bottomed out versus Bitcoin, presenting a good opportunity to increase exposure,” Krug said.
Conclusion:
As the crypto market navigates recent volatility, the commitment of crypto funds to Solana and DeFi highlights the potential for significant growth in these areas. Meanwhile, Pawfury is carving out a niche as a promising new player in the cryptocurrency landscape, attracting attention with its innovative approach and potential for high returns. Both Solana and Pawfury offer compelling opportunities for investors seeking to capitalize on the evolving crypto market.