Global financial markets have recently experienced severe turbulence, and the cryptocurrency sector is no exception. However, as investors often say, market reversals often create rare buying opportunities for visionary investors. In this volatile environment, understanding the strategic positioning of professional investors becomes particularly important.
Due to the massive and indiscriminate global sanctions announced by President Trump last Wednesday, cryptocurrencies continued to decline along with the overall market. As of the time of writing, Bitcoin has fallen 5.86% since then, even after a slight recovery following its first drop below $75,000 (the first time since the November 5th election). Other large-cap cryptocurrencies like ETH, Solana, and XRP have also performed poorly during this period, underperforming market leaders.
In this market environment, panic sentiment has clearly intensified. The Cboe VIX index, which measures expected stock market volatility, has reached 60 for the first time since the COVID-19 pandemic, while the Deribit Bitcoin Volatility Index (DVOL), the closest equivalent to VIX in the cryptocurrency market, has risen nearly 30% in the past week.
In this situation, investors seeking to hedge—or purchase U.S. Treasury bonds—is a natural reaction. However, there's a common investment adage: "Be fearful when others are greedy, and greedy when others are fearful." This means now is an opportunity to purchase blue-chip assets at a discount. To understand how professional funds are positioning themselves in the cryptocurrency market during this volatile period, two anonymous primary venture capitalists shared their companies' strategic insights and provided key information about which categories and industries might perform best in the coming weeks and months.
Store of Value: Bitcoin and Ethereum
Unsurprisingly, both interviewees still consider Bitcoin the top choice. Recently, gold has repeatedly hit new highs and is widely regarded as a symbol of a safe-haven asset. Meanwhile, Bitcoin is increasingly demonstrating its properties as a "digital store of value". Despite recent volatility, the market capitalization comparison chart shows significant growth potential between Bitcoin and gold.
Currently, gold's market value is approximately $20.4 trillion, while Bitcoin's market value is only $1.64 trillion. One investor noted: "To reach a 1:1 market value ratio with gold, Bitcoin would need to rise 12 to 15 times. In the current environment, this is the most understandable and most promising opportunity."
Ethereum is also considered a noteworthy asset, although it has significantly underperformed Bitcoin in recent years and is currently at its lowest point relative to Bitcoin since the early stages of the pandemic.
One respondent mentioned that after Ethereum's transition from Proof of Work (PoW) to Proof of Stake (PoS) in 2022, its monetary policy has become more deflationary, to some extent inheriting Bitcoin's "store of value" narrative. Despite recent low network usage and some inflation, from a valuation perspective, the current price is at a historical low.
Another investor stated: "Ethereum is indeed at a good buying point right now."
Solana and DeFi Opportunities
Decentralized Finance (DeFi) tokens have generally been hit hard this year, with native tokens of trading platforms and lending protocols like Uniswap, Aave, Curve, and Compound falling nearly 50% year-to-date. However, both investors believe that under the current backdrop of continued macroeconomic tightening, this sector may stage a strong comeback.
One noted that during a period of low stablecoin yields, DeFi might actually see capital inflows. This is because there are still ways to obtain relatively high yields through on-chain lending portfolio cycling. "This is very similar to the situation in 2021," he added.
Two projects worth focusing on are Raydium and Hyperliquid. The former is a traditional automated market-making platform built on Solana, similar to Uniswap; the latter focuses on perpetual contracts, a cash-settled derivative.
If unwilling to choose a single token, Solana itself can be considered. "Solana is somewhat like an index fund for DeFi. It has many very interesting DeFi projects developing on it."
EigenLayer and Near: Next Infrastructure Opportunities
Both investors believe that last year's hot "AI + Blockchain" concept was largely exaggerated. One directly stated, "Basically, they're all air projects." However, he also pointed out that such situations are not uncommon in early tracks, citing the 2017 ICO wave. "The first wave is usually air projects, but there might be a tiny bit of real substance, which is worth paying attention to in the subsequent years."
They believe the next phase of AI narrative is more likely to focus on "AI agents", such as travel booking robots. The challenge is ensuring that funds deposited into such agent programs cannot be misused. One method is to have their security guaranteed by Ethereum itself.
However, Ethereum is not suitable for all projects, mainly due to high transaction costs and the need for some applications to run cross-chain. EigenLayer was born in this context, providing a "shared trust layer" that allows projects to leverage Ethereum's security without fully deploying on its mainnet.
"Once your application runs on EigenLayer, its fund security is guaranteed by Ethereum," one investor stated. He also specifically mentioned that Near might benefit from this trend.
EigenLayer was once one of the most anticipated projects in the market, but its token was launched in October last year, near the market peak, and subsequently crashed over 80%. However, if the current narrative holds true, this might mean investors can buy in at a significant discount. One investor added: "EigenLayer's market cap is not even $10 billion now, this is a time to buy and hold."
Overall, although the crypto market is still digesting macroeconomic and policy uncertainties in the short term, for institutional investors, this is a critical moment to reallocate assets and position for the next upward cycle. From value storage assets to infrastructure and DeFi platforms, to emerging AI interaction applications, the direction of capital deployment is gradually becoming clear.
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