Financing data has dropped to freezing point, is the encryption market out of touch with Bitcoin?

Source: OdailyNews

Recently, Bitcoin’s rise has detonated the FOMO point in the crypto community, and its price has once again exceeded 6 after 829 days. There is still no sign of a correction after 10,000 US dollars, and it continues to rise to 68,000 US dollars. At the time of writing, Bitcoin price remains above $66,000, according to TradingView data.

As high as $68,000, Bitcoin needs just another 1.2% to hit its all-time high of 2021. Bitcoin’s strong rise has caused unlimited FOMO in the community. According to Alternative data, the panic and greed index is also rising, reaching 90 for the first time since February 2021. The market has fallen into extreme greed.

Announced financing amount falls to 2020 low

When the price of Bitcoin rises, many people choose to focus on venture capital as their investment strategy in the bull market. These investors are often regarded as As the market leader.

In fact, venture capital institutions have been following the fluctuations in Bitcoin prices to increase investment in projects, especially during the last two bull markets. There is a clear positive correlation between the price of Bitcoin and the amount raised by venture capital firms.

Chart of BTC and fundraising amount, source: @DefiIgnas

However, the interesting thing is, Although BTC has rebounded from the 2022 lows and surpassed the 2018 bull market peak, the amount of financing has continued to decline, returning to pre-2020 levels.

According to community member statistics, total crypto fundraising announced in February 2024 reached $726.8 million, coming from 134 companies and 497 independent investors. Among these financing projects, DeFi accounted for the highest proportion of investment, with a total of 31 investments, accounting for 23.1% of the total amount raised. Infrastructure performed best in terms of funding, attracting a total of $294.4 million in investment, accounting for 40.5% of total funds raised.

In such a hot market, the amount of financing announced last month was only US$486 million. Although it increased by 20.4% from January, it was 28.7% lower than last February.

Source: @DS_Blockchain

Why is this?

Judging from the development of the previous two bull markets, although many Asian venture capital companies value the opportunities in the bear market and prefer to take action during the bear market cycle, judging from the overall performance, venture capital companies are indeed more inclined to follow market trends. Make an investment.

Nowadays, the investment amount and the rise of Bitcoin are obviously developing in opposite directions. The reason is that this bull market is triggered by Bitcoin ETF, a bull market belonging to Bitcoin.

ETF funds disrupt the pace of announcements by project parties

If we look at the logic of venture capital investment, since the inscription market was empty, venture capital and private equity investment companies have not researched and invested in future cash. Strong fundamentals with huge flow potential, rather than just following trends and a FOMO investing approach looking for future funding rounds.

For the team, after the project raises funds during the bear market, the financing status will not be announced immediately. So if you just look at the data, it may not be up to date. Normally, project parties would choose a time to make an announcement when it makes more sense to them.

So, what is a more meaningful time?

Since last year, the approval of Bitcoin ETF has been a catalyst for the crypto market, especially since January 11. The approval of ETF has undoubtedly brought Bitcoin and cryptocurrency to a new starting point in history. As the most anticipated development in the global cryptocurrency market, every move of the spot Bitcoin ETF extremely controls this already fragile market.

For a project, there is a certain process for publicity. Now, two months have passed since the ETF was approved, and the price of Bitcoin seems to give no chance for the market to react at all.

According to Tradingview, the Bitcoin price curve has been on an upward trend since late September last year. The amount of financing announced at this time was still within expectations. However, after Bitcoin started to rise, the amount of financing did not appear. There has been a clear change, and even in January, there was still not much improvement after the passage of the ETF. It can even be said that since January, the upward trend of Bitcoin has become more violent, while the amount of financing has begun to fall instead of rising.

Whether it’s the lack of venture capital or the lag in project announcements, it can be said that the Bitcoin ETF has indeed disrupted the pace of all participants. For the project side, this "more meaningful time" seems impossible to accurately grasp.

ETF funds are not flowing into the crypto industry?

On February 29, the single-day trading volume of the Bitcoin spot ETF reached US$7.69 billion, setting a new historical record since its release. In the following days, the overall volume remained at a level of 4 billion-5 billion. Strong inflows into Bitcoin spot ETFs in less than two weeks have pushed Bitcoin prices closer to all-time highs.

Looking at the capital market, the capital flow in the entire crypto market has undoubtedly increased. The passage of the Bitcoin ETF is not only making waves in the crypto industry, the entry of traditional old money is also helping the price of Bitcoin soar, but most of the funds actually just flow to Bitcoin.

According to coinmarket data, the current total market value of cryptocurrency reaches 2.38 trillion, with a 24-hour increase of 2.79%. Among them, the price of Bitcoin was US$66,557, a 24-hour increase of 1.46%, with a market value of 1.3 trillion, and a market share of more than half of the entire crypto market value, reaching 51.17%.

The price of Bitcoin has been rising, but the price of altcoins has remained motionless or even falling. Many people believe that the funds flowing into the Bitcoin spot ETF will not flow to the altcoins on the market, but will be cashed into US dollars, so there will be no altcoin bull market in this round.

Under such a situation of attracting money, it is difficult for the rest of the crypto market to stand out. Even the benefits of the Cancun upgrade are not enough to attract funds to the Ethereum ecosystem. Currently, what can be compared with this cycle is the pull of meme coins. The Solana ecosystem has indeed attracted a lot of traffic because of memes. But looking at the entire crypto market, crypto projects are springing up in the bull market. How many of them can get a share of Bitcoin’s capital flow?

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