Pantera Capital’s Cosmo Jiang Predicts Crypto Investing Will Shift Toward Fundamentals
As the cryptocurrency industry matures, fundamental analysis will play a much larger role in investment decisions, according to Cosmo Jiang, portfolio manager at Pantera Capital. While cryptocurrency investing has long been associated with speculative behavior, Jiang argues that this trend cannot last forever.
For many crypto enthusiasts, it has been common to invest in quirky tokens—like those named after dogs or other animals—that outperform more technically sound projects. But Jiang, who joined Pantera Capital in 2022 after working in banking and private equity, insists that such an approach will soon give way to more traditional investing principles.
“If fundamental investing doesn’t come to crypto, it means we’ve failed,” Jiang explained in an interview with CoinDesk. “All assets eventually follow the laws of gravity. The one thing that matters in the end—this has been true for millennia—is cash flow.”
Jiang points out that crypto has grown exponentially, reaching a market cap of $3.4 trillion, largely driven by retail interest. However, to maintain that growth and attract institutional capital, the focus must shift toward fundamentals, which are the driving forces behind sustainable growth in any asset class.
With around $5 billion in assets under management, Pantera Capital is already well-established in the crypto space. About 75% of those assets are tied up in venture vehicles, with the rest allocated to liquid assets. As the portfolio manager of the firm’s liquid token fund, Jiang’s focus is on publicly traded tokens.
The Key to Picking Crypto Investments
Jiang’s investment strategy revolves around one central concept: product-market fit. He looks for crypto projects that develop products catering to high-demand areas. The core of his evaluation centers on two questions: Can the team execute their vision, and will the project’s token capture the economic value it generates?
“This may sound simple to anyone who works with traditional assets, but for whatever reason, this approach is non-consensus in crypto,” Jiang said.
Solana vs. Ethereum
When it comes to layer-1 blockchains, Jiang is particularly interested in Ethereum and Solana, both of which have established business models with revenue generation through transaction fees. However, Jiang has expressed concern about Ethereum’s ability to sustain its growth.
Ethereum, which launched in 2015, has long been a leading smart contract platform, but it’s facing stiff competition from Solana. Over the last six months, Solana has averaged nearly 3 million daily active addresses, far outpacing Ethereum’s 454,000. Solana has also seen its revenue increase by 180% over the last month, compared to Ethereum’s 37%. Solana’s total annual revenue of $1.27 billion is rapidly closing in on Ethereum’s $2.4 billion, even though Solana’s market cap is still four times smaller.
Jiang notes that, although Ethereum has a talented development team and an interesting roadmap, it’s losing market share to newer, more efficient networks like Solana. “Ethereum is a very large asset at $435 billion, but it’s currently losing market share,” Jiang observed.
Additionally, Ethereum’s switch to a modular blockchain design, splitting tasks across its main chain and layer-2 solutions like Arbitrum and Optimism, contrasts with Solana’s simpler, monolithic design. Jiang believes Solana has an advantage when it comes to user interface and the ability to capture the value generated through its native token, SOL. Ethereum, by splitting its value across multiple tokens and chains, faces a greater challenge in achieving the same level of network value.
The DePIN Opportunity
While layer-1 projects remain a key focus for Jiang, he is also excited by the potential of DePIN (Decentralized Physical Infrastructure Networks). DePIN projects leverage blockchain technology to build real-world physical infrastructure. Two notable examples include Render Network (RNDR), which allows people to lease unused computing power, and Arweave (AR), a data storage network.
Jiang sees DePIN as a growing sector that can attract significant investment. “These are real businesses in the real world,” he said. “This is something that people can actually allocate capital to and get behind.”
However, Jiang is not entirely dismissive of memecoins. While he doesn’t invest in the tokens themselves, he does see value in the platforms that facilitate memecoin trading, likening them to profitable casinos. “I’ve made a lot of money investing in casinos,” he said, pointing out that the $540 billion global gambling market dwarfs the revenue generated by decentralized exchanges and trading bots.
Looking Ahead
Despite his strategy focusing on fundamentals, Jiang’s portfolio has not yet outperformed Bitcoin (BTC), which posted a 132% return in 2024. Jiang attributes this lag to Bitcoin being further along in its bullish cycle while blockchain technology has not seen as much development this year.
Nonetheless, Jiang remains confident in the future of blockchain. “If blockchain reaches billions of users, everything else will grow much faster than Bitcoin,” he said. Pantera Capital’s strategy, according to Jiang, is focused on multi-year growth, driven by fundamental analysis and the continued maturation of the crypto space.
“If we get this right, we will do extremely well in the long term,” he concluded.
