Solana Treasuries Decline 40%, But One CIO Predicts a Bright Future

A recent downturn has led to a 40% drop in the value of Solana treasuries, causing significant concern among investors. However, Parker White, Chief Investment Officer of DeFi Development Corporations (DFDV), believes this drop presents an opportunity for future growth. He predicts that as the digital asset sector evolves leading up to 2030, Solana will capture more market value, thus making current prices a bargain.

Key Takeaways

According to DFDV's CIO, Solana is expected to capture significant value as digital assets expand towards 2030, suggesting current prices are undervalued.
Total capital outflows from the Solana market have reached $3 billion, exceeding existing demand.
Various digital asset treasuries (DATs) are currently losing value due to ongoing market corrections, with Solana treasuries notably affected.
Specifically, Solana's [SOL] price has decreased by 45%, from $253 to $135, resulting in multi-million dollar losses for DAT holders.

Solana SOL Source: Blockworks

Solana SOL

Opportunity or Decline?

The value of DFDV’s holdings has dropped from $507 million to $310 million due to the market correction. Nevertheless, Parker White, DFDV’s CIO, sees the current volatility as an opportunity for growth. He states, “Solana is going to experience significant growth over the next decade, potentially reaching $10,000. The world is becoming increasingly digital, and Solana is poised to capture a substantial portion of this value transfer.”

White anticipates continued volatility until 2028, noting that such conditions create opportunities for both the company to increase its returns (SOL per share) and for long-term investors to purchase at more favorable prices.

Currently, the combined net asset value for all Solana treasury firms has fallen from $3.5 billion to $2.1 billion, reflecting a 40% decline across the ecosystem. The market-to-net-asset-value (mNAV) of these holdings is either at break-even or below, which could lead to a sell-off of SOL holdings to reinvest into boosting their stock prices.

White emphasized that they will continue to balance and enhance the mNAV even in challenging market environments, although he did not confirm if this would involve automatic selling of some of their 2.1 million SOL holdings.

Declining Treasury Inflows

In the fourth quarter, inflows into Solana DATs have dwindled. By the second week of November, the treasury inflows for SOL had reached zero.

Solana SOL

Source: DeFiLlama

In contrast, U.S.-based spot SOL ETFs saw $46.3 million in weekly inflows, yet the price of SOL continued to decline. A further indication of capital outflow from the SOL market is reflected in the drop in realized capitalization, with approximately $3 billion leaving since October 10.

Solana SOL

Source: Glassnode

A rise in the Realized Cap could indicate renewed capital inflows, which might signal a potential recovery in SOL’s price.