Written by: angelilu, Foresight News
Within just two days, Solana received over $2 billion in huge bets from institutional investors managing tens of billions of dollars in assets.
Can SOL, which shone brightly in the previous round of Meme frenzy, replicate the 'homework' of BTC and ETH this time?
An increasing number of publicly traded companies are beginning to hold SOL on their balance sheets. Currently, Solana has a total market value of $101.4 billion. According to data from The Block Dashboard, the total SOL held by publicly traded companies is 3.44 million, valued at approximately $650 million at an average price of $190 at the time of writing. Among them, Upexi holds over 1.82 million SOL, worth about $350 million.
https://www.theblock.co/data/treasuries/solana-treasuries/stacked-sol-holdings-by-public-companies
But the new capital layout is reshaping the current landscape. Currently, the SOL held by the upper management of companies accounts for only 0.69% of the circulating supply, while the recent commitments of $1.25 billion from Pantera Capital and $1 billion from the joint efforts of Galaxy, Multicoin, and Jump will be 3.5 times the current holdings of publicly traded companies.
The entrance of big players signals a silent battle of capital.
Galaxy Digital, Multicoin Capital, and Jump Crypto announced a joint action on August 25, with the three crypto investment giants negotiating with potential supporters to raise approximately $1 billion specifically for accumulating Solana.
This is not a simple investment but a well-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 finance company focused on Solana by acquiring an unnamed publicly traded 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 ecosystem projects. Galaxy Trading had previously raised about $620 million specifically to purchase SOL at a discount from FTX's bankruptcy assets. And now, they are joining forces to increase their stakes.
A day later (August 26), Pantera, led by former Tiger Management executive Dan Morehead, revealed its ambitious plan in a report by The Information—raising up to $1.25 billion to acquire a Nasdaq-listed company and transform it into an investment company focused on Solana, named 'Solana Co.'.
This is not a spontaneous move by Pantera. As early as April 2024, they began raising over $1 billion for a new fund. And now, the ambition behind this seemingly ordinary fund has finally surfaced—targeting the Solana ecosystem.
Notably, Pantera is not only increasing its investment but also partnering 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 strong confidence in Solana's future.
But Pantera's strategy goes beyond this. Reports indicate that they have quietly invested approximately $300 million in Digital Asset Finance (DAT) companies across 'various tokens and regions.' This layout not only generates returns but also increases net asset value, showcasing the mature strategy of established investment institutions in the crypto space.
Why Solana? The strategic logic of institutional capital.
Smart investors are always good at spotting opportunities in crises. It is not hard to see that before the trend of Bitcoin and Ethereum treasury companies became popular, Pantera and Galaxy both purchased heavily discounted SOL tokens from the bankrupt FTX. Simply put, they have made quite a bit of money from SOL.
The first batch of SOL tokens sold from FTX's bankruptcy assets (numbering between 25 million to 30 million) was sold at $64 each, over 60% lower than the market price of SOL at that time, while the second batch of SOL was sold at $95 to $110 per token (15% to 26% lower than market price). There is no public information disclosing how much profit Pantera and Galaxy made from FTX's bankruptcy restructuring. However, the aggressive new strategy can easily be interpreted as a signal of having made money.
The rise of the Digital Asset Finance (DAT) company model provides these institutional investors with a new way to capture value. Through this model, they can not only hold SOL for potential appreciation but also earn stable returns through various DeFi protocols, achieving multiple asset growth.
The massive entry of institutional capital will undoubtedly provide strong support for SOL's price. Historically, when institutional investors begin to systematically accumulate a certain cryptocurrency, it often drives it into a relatively stable upward channel.
The case of Ethereum has already proven this. With the launch of ETFs and the entry of institutional investors, ETH not only saw a price increase but also a significant reduction in volatility, leading to a more mature market structure. Currently, the ETH reserves held by 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 still falls 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 ETF approval for over a year, analysts have stated that SOL's spot ETF is expected to be approved this year.
Traditional financial institutions' interest in Solana is not a momentary impulse but is based on its unparalleled technological advantages. In balancing the three major challenges of blockchain (decentralization, security, and scalability), Solana stands out with its impressive transaction processing capabilities and low Gas fees.
While Ethereum is still struggling with high transaction fees, Solana has already been able to process thousands of transactions per second while maintaining almost negligible costs. For institutional investors accustomed to the efficiency of traditional finance, this performance undoubtedly meets their expectations.
More importantly, the continuously growing decentralized application (dApp), NFT, and DeFi protocol ecosystem on Solana provides a rich array of use cases and growth potential. This thriving ecosystem is one of the key factors attracting institutional investors.
For developers and projects on Solana, this is undoubtedly good news. More capital means more experiments, innovations, and use cases, and the ecosystem is expected to enter a new stage of accelerated development.
In particular, the success of the digital asset finance company model may spawn more similar investment vehicles. This model not only provides institutional investors with convenient entry channels 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 firms focusing on specific blockchain ecosystems, forming a brand new landscape of institutional investment.
Potential risks of power redistribution
When Solana was first born, few could foresee that it would attract so much institutional capital attention in just a few years. From being on the brink of extinction due to the collapse of FTX to now becoming a favored investment target for institutional giants, Solana's story itself is a testament to 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 the benchmark, more traditional financial institutions may follow suit and incorporate Solana into their diversified portfolios.
However, the massive influx of institutional capital also brings new concerns. When a small group of institutions hold a large amount of SOL, it will, to some extent, re-concentrate the originally decentralized assets, which may also affect the degree of decentralization of the Solana network. The SOL treasury company DeFi Dev Corp is actively hoarding tokens while also stating on Twitter that they will vote in favor of Solana's Alpenglow proposal, which is essentially designed to make Solana's voting 'faster.' When ordinary users face these complex technical terms, will they follow the vote, making Solana more aligned with the interests of large institutions?
Furthermore, the risk of price manipulation may also increase. Once these large holders decide to adjust their positions, the market may face severe fluctuations.
