The global financial markets have recently faced significant turbulence, and the cryptocurrency sector has been no exception. As volatility spikes and investor sentiment sours, a familiar truth in finance emerges: market downturns often create prime opportunities for forward-thinking investors. In times like these, understanding how professional capital allocators are positioning themselves becomes crucial.
Following former President Trump’s announcement of sweeping global tariffs, risk assets across the board took a hit. Bitcoin dropped over 5.86% in the immediate aftermath—briefly falling below $75,000 for the first time since the November 5 election—even as it later recovered slightly. Major altcoins like Ethereum (ETH), Solana (SOL), and XRP underperformed relative to Bitcoin, reflecting broader market stress.
Market fear is palpable. The Cboe Volatility Index (VIX), a key gauge of expected equity market swings, surged to 60—the highest level since the early days of the pandemic. Similarly, the Deribit Bitcoin Volatility Index (DVOL) jumped nearly 30% in just one week, underscoring rising uncertainty in crypto markets.
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In such environments, capital naturally flows into safe-haven assets like U.S. Treasuries. Yet seasoned investors live by a timeless principle: “Be greedy when others are fearful.” This moment may offer a rare chance to acquire high-conviction digital assets at discounted valuations. To uncover where institutional money is flowing, two anonymous venture capitalists from leading crypto funds shared strategic insights on the sectors and projects they believe could lead the next upcycle.
Bitcoin and Ethereum: Core Holdings in a Shifting Landscape
Despite short-term noise, foundational assets remain central to long-term portfolios. One investor highlighted a compelling comparison: global gold markets cap at approximately $20.4 trillion, while Bitcoin’s current market capitalization sits around $1.64 trillion.
“This means Bitcoin needs to appreciate 12 to 15 times just to match gold’s value,” he said. “In today’s macro environment, that’s one of the clearest and most defensible investment cases.”
Bitcoin’s narrative as “digital gold” continues to gain traction, especially amid geopolitical tensions and monetary instability. But Ethereum shouldn’t be overlooked—even if its price performance has lagged significantly behind Bitcoin in recent years.
Ethereum recently hit its lowest BTC/ETH ratio since the early pandemic period. However, structural improvements post-Merge—particularly its shift from proof-of-work (PoW) to proof-of-stake (PoS)—have made its monetary policy increasingly deflationary under certain conditions. This evolution allows ETH to partially inherit Bitcoin’s store-of-value story while maintaining its role as the backbone of decentralized applications.
“Given where Ethereum is priced today—near historical valuation lows—it’s actually a very attractive entry point,” noted another VC. “Network usage may be down temporarily, and inflation has ticked up slightly, but the fundamentals remain strong.”
DeFi’s Quiet Resurgence: Yield Opportunities Return
With stablecoin yields declining due to falling interest rates in traditional finance, decentralized finance (DeFi) could be poised for a comeback. Historically, when centralized options offer less return, capital rotates back into on-chain yield-generating strategies.
One investor observed parallels with 2021: “There are still ways to generate meaningful returns through leveraged lending and yield loops on-chain—especially in well-designed protocols.”
Two platforms stood out in their analysis:
- Raydium: A leading automated market maker (AMM) built on Solana, offering efficient trading and liquidity provision with low fees.
- Hyperliquid: A decentralized perpetual futures exchange focused on high-performance derivatives trading with cash settlement.
Both represent innovative infrastructure expanding access to advanced financial products without intermediaries.
For those hesitant to pick individual tokens, Solana itself presents a diversified exposure play. “Think of Solana as a DeFi index fund,” said one investor. “It hosts a growing ecosystem of high-potential projects across lending, trading, and derivatives.”
EigenLayer and Near: The Next Wave of Infrastructure Innovation
While last year’s wave of AI-themed blockchain projects drew skepticism—dubbed “mostly vaporware” by one VC—not all emerging narratives lack merit. As with past cycles like the 2017 ICO boom, early hype often masks genuine innovation.
The more credible evolution of AI in crypto isn’t just about running models on-chain—it’s about AI agents: autonomous programs capable of executing tasks like booking flights or managing portfolios. But a critical challenge remains: How do you trust an AI agent with your money?
Enter EigenLayer, a protocol enabling applications to inherit Ethereum’s security through “restaking.” Instead of building their own consensus layers, developers can leverage Ethereum’s validator set to secure their systems—creating what some call a “shared trust layer.”
“If your app runs on EigenLayer, your funds are protected by Ethereum-level security,” explained one investor. “That’s powerful for decentralized AI agents or cross-chain applications needing robust trust assumptions.”
EigenLayer’s token launched in October 2023 near the peak of the bull market and subsequently fell over 80%. Yet this correction may present a buying opportunity: with a current market cap under $1 billion, it trades at a steep discount to its potential utility.
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Near Protocol also emerged as a beneficiary of this trend. Its sharded architecture and developer-friendly tools make it well-suited for scalable AI integration. With growing interest in secure, autonomous agents, both EigenLayer and Near could play pivotal roles in shaping the next infrastructure layer.
FAQ: Your Questions Answered
Q: Why are VCs still bullish despite market declines?
A: Downturns create mispricings. Assets like Bitcoin and Ethereum trade below intrinsic value estimates based on adoption curves and scarcity models, making them strategic buys for long-term holders.
Q: Is DeFi still relevant after past collapses?
A: Absolutely. While risky protocols failed, resilient ones improved security and sustainability. The core value proposition—open, permissionless finance—remains intact and is regaining momentum.
Q: What makes EigenLayer different from other staking platforms?
A: It enables “actively validated services” beyond simple staking. Projects can use Ethereum’s security for novel use cases like data availability layers or decentralized sequencers.
Q: Can AI agents really work securely on blockchains?
A: Not yet at scale—but with restaking and zero-knowledge proofs advancing rapidly, secure automation is becoming feasible. Trust minimization is key.
Q: Should I invest in AI-themed crypto projects now?
A: Focus on infrastructure first—projects enabling secure computation, verifiable AI outputs, and decentralized coordination—rather than speculative AI tokens.
Q: How do I evaluate which DeFi platforms are worth using?
A: Look at total value locked (TVL), audit history, team credibility, fee structure, and whether they solve real user problems—not just chase trends.
Strategic Takeaways for the Next Cycle
While macro uncertainty persists, institutional investors are actively rebalancing portfolios toward high-conviction opportunities. From core holdings like Bitcoin and Ethereum to emerging infrastructure plays like EigenLayer and ecosystem plays like Solana and Near, the roadmap for the next bull run is taking shape.
👉 Explore how leading investors build resilient crypto portfolios ahead of the next surge.
The current dip isn’t just noise—it’s a signal. For those willing to look beyond short-term volatility, today’s market offers a rare alignment of discounted valuations, maturing technology, and rising real-world utility across blockchain networks.
By focusing on value storage, yield innovation, and trust-minimized infrastructure, savvy investors aren’t just surviving the downturn—they’re laying the foundation for outsized returns in the next upcycle.