Written by: angelilu, Foresight News
In just two days, Solana received over $2 billion in massive bets from institutional investors managing billions in assets.
Can SOL, which shone brightly in the last meme market, really replicate the 'homework' of BTC and ETH this time?
An increasing number of publicly listed companies are starting to hold SOL on their balance sheets. Currently, Solana's total market capitalization is $101.4 billion, and according to The Block Dashboard data, listed companies hold a total of 3.44 million SOL, which, based on an average price of $190 at the time of writing, is valued at about $650 million. Among them, Upexi alone holds over 1.82 million, worth about $350 million.
Data source
However, new capital layouts are reshaping the current landscape. The SOL held by current upper-tier companies accounts for only 0.69% of the circulating supply, while the recent $1.25 billion from Pantera Capital and the combined $1 billion injection from Galaxy, Multicoin, and Jump will be 3.5 times the existing listed companies' SOL holdings.
The entry of big players, a discreet battle of capital
Galaxy Digital, Multicoin Capital, and Jump Crypto officially announced a joint action on August 25, with the three crypto investment giants negotiating with potential supporters to raise about $1 billion specifically for accumulating Solana.
This is not a simple investment but a meticulously planned market action. The three giants have hired the well-established Wall Street investment bank Cantor Fitzgerald LP as the lead bank, planning to create a digital asset financial company focused on Solana by acquiring an unnamed publicly listed company.
It is worth noting that the Solana Foundation has expressed support for this, and the transaction is expected to be completed in early September.
This action is not an isolated event, but a long-term layout. Multicoin and Jump have previously made significant investments in Solana's ecological projects. Galaxy Trading had previously raised about $620 million specifically to purchase SOL at a discount from FTX's bankruptcy assets. Now, they are joining forces to increase their bets.
A day later (August 26), led by former Tiger Management executive Dan Morehead, Pantera also revealed its ambitious plan in a report by The Information—to raise up to $1.25 billion to acquire a NASDAQ-listed company and transform it into an investment company focused on Solana, naming it 'Solana Co.'
This is not Pantera's impromptu move. As early as April 2024, they began raising over $1 billion for a new fund. Now, the ambition behind this seemingly ordinary fund has finally surfaced—targeting the Solana ecosystem.
Most notably, Pantera is not only increasing its own stake but also teaming up with ParaFi Capital to support Sharps Technology, a company dedicated to developing financial tools for Solana that is raising over $400 million. This series of actions reveals Pantera's firm confidence in Solana's future.
But Pantera's strategy doesn't stop there. It has been revealed that they have quietly invested about $300 million in digital asset financial (DAT) companies in 'various tokens and regions.' This layout not only generates returns but also increases net asset value, demonstrating the mature strategy of established investment institutions in the crypto space.
Why Solana? The strategic logic of institutional capital
Smart investors are always adept at finding opportunities in crises. It is not difficult to see that before the trend of clustered Bitcoin and Ethereum treasury companies became popular, Pantera and Galaxy had already purchased SOL tokens at significant discounts from the bankrupt FTX. In simple terms, they have made quite a bit of money from SOL.
The first batch of SOL tokens sold from FTX's bankruptcy assets (between 25 million and 30 million) was sold at a price of $64 each, more than 60% lower than SOL's market price at that time, while the selling price of the second batch of SOL tokens ranged between $95 and $110 each (15% to 26% lower than the market price). No public information has disclosed how much Pantera and Galaxy profited from FTX's bankruptcy restructuring. However, the aggressive new strategy can easily be interpreted as a signal of making money.
The rise of the digital asset financial (DAT) company model provides these institutional investors a brand new way to capture value. Through this model, they can not only hold SOL to gain potential appreciation but also achieve stable returns through various DeFi protocols, realizing multiple asset increments.
The large-scale entry of institutional capital will undoubtedly provide strong support for the price of SOL. From historical experience, when institutional investors begin to systematically accumulate a certain crypto asset, it often pushes it into a relatively stable upward channel.
The example of Ethereum has already proven this. With the launch of ETFs and the entry of institutional investors, ETH not only saw its price rise but also a significant decrease in volatility, resulting in a more mature market structure. Currently, the ETH reserve holdings of 69 Ethereum treasury entities have reached 4.1 million, accounting for 3.39% of Ethereum's circulating supply, with a holding value of approximately $20 billion. Ethereum recently broke its highest record in nearly four years, partly due to the purchases made by these entities.
Currently, Solana seems to be replicating this path, but its scale is still far behind BTC and ETH. With the addition of more institutional holders, the liquidity structure of SOL will undergo a qualitative change, potentially forming a more stable but also more concentrated holding pattern. Additionally, after BTC and ETH's spot ETH was approved for over a year, analysts have hinted that SOL's spot ETH may be approved this year.
Traditional financial institutions are interested in Solana not out of impulse but based on its unparalleled technological advantages. In balancing the three major challenges of blockchain (decentralization, security, and scalability), Solana stands out with its astonishing transaction processing capability and low Gas fees.
While Ethereum is still struggling with high transaction fees, Solana has been capable of processing thousands of transactions per second while maintaining almost negligible costs. For institutional investors accustomed to traditional financial efficiency, this performance undoubtedly meets their expectations.
More importantly, Solana's continuously growing ecosystem of decentralized applications (dApps), NFTs, and DeFi protocols provides it with a wealth of application scenarios and growth potential. This all-encompassing ecosystem prosperity is one of the key factors attracting institutional investors.
For developers and project parties on Solana, this is undoubtedly good news. More capital means more experiments, innovations, and application scenarios, and the ecosystem is expected to enter a new stage of accelerated development.
In particular, the success of the digital asset financial company model may give rise to more similar investment vehicles. This model not only provides institutional investors with a convenient entry channel but also offers a feasible path for the integration of traditional finance and the crypto world.
In the coming years, we may see more investment companies focusing on specific blockchain ecosystems emerge, forming a brand new landscape for institutional investment.
Potential risks of power redistribution
When Solana was born, few could foresee that it would attract so much institutional capital attention in just a few years. From nearly disappearing due to the collapse of FTX to becoming a favored investment target for institutional giants today, Solana's story itself is a reflection of the incredible allure of the crypto world.
The current wave of institutional investment is likely just the beginning. As pioneers like Pantera and Galaxy set benchmarks, more traditional financial institutions may follow suit, incorporating Solana into their diversified investment portfolios.
However, the large-scale entry of institutional capital has also brought new concerns. When a small group of institutions holds a significant amount of SOL, it somewhat re-concentrates what was originally a decentralized asset and may affect the degree of decentralization of the Solana network. The SOL treasury company DeFi Dev Corp. is actively accumulating tokens while also indicating on Twitter that they will vote in favor of the Alpenglow proposal, which will be launched by Solana this week. In simple terms, this proposal aims to make Solana's voting 'faster.' When ordinary users face these complex technical terms, will they follow the vote, turning Solana into a version that better aligns with the interests of large institutions?
Moreover, the risk of price manipulation may also increase. Once these large holders decide to adjust their positions, the market could face severe volatility.
