Recently, Bitcoins rise has detonated the FOMO point in the crypto community. Its price has shown no sign of correction after breaking through $60,000 again after 829 days, and continued to rise to $68,000. According to TradingView data, Bitcoin price remains above $66,000 at the time of writing.

As high as $68,000, Bitcoin needs only another 1.2% to hit its all-time high for 2021. The strong rise of Bitcoin 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 funding falls to 2020 lows

Paying attention to venture capital when the price of Bitcoin rises may be one of the ways many people choose their own targets in a bull market, and they are often regarded as market leaders.

In fact, venture capital institutions have always followed the rise in the price of Bitcoin and launched more projects. Especially during the first two rounds of bull markets, there was a clear positive correlation between the price of BTC and the amount of funds raised by venture capital institutions.

Chart of BTC and fundraising amount, source:@DefiIgnas

However, what is interesting is that even though BTC has recovered from the lows in 2022 and is even higher than the peak of the bull market in 2018, the amount of financing has continued to decline, returning to pre-2020 levels.

According to statistics from community members, the total crypto fundraising announced in February 2024 reached $726.8 million, coming from 134 companies and 497 independent investors. Among these financing projects, DeFi accounts 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 capital investment, attracting a total of $294.4 million in investment, accounting for 40.5% of the 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 in February last year.

Image source:@DS_Blockchain

Why is this happening?

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 invest during the bear market cycle, judging from the overall performance, venture capital companies do tend to invest according to market trends.

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 project announcements

If we look at the logic of venture capital investment, since the shortfall in the Inscription market, venture capital and private equity investment companies have not studied and invested in strong fundamentals with huge future cash flow potential, but have only followed trends and FOMO investment methods to look for the future. financing 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, whats a more meaningful time?

Since last year, the approval of the Bitcoin ETF has been a catalyst for the crypto market, especially since January 11. The approval of the ETF has undoubtedly brought Bitcoin and cryptocurrencies 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 announcement. Now, two months have passed since the ETF was approved, and the price of Bitcoin seems to have given no chance for the market to react.

According to Tradingview, as early as late September last year, the Bitcoin price curve showed an upward trend. The amount of financing announced at this time was still within expectations. However, after Bitcoin started to rise, the amount of financing did not change significantly, and even reached 1 In March, there was still not much improvement after the adoption of ETFs. 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 decline instead of rising.

Whether it is due to lack of venture capital or lagging 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 money not flowing into crypto?

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. The Bitcoin spot ETF has seen strong inflows in trading volume in less than two weeks, pushing the price of Bitcoin closer to an all-time high.

From a capital perspective, the capital flow in the entire crypto market has undoubtedly increased. The passage of the Bitcoin ETF not only caused waves in the crypto industry, the entry of traditional old money was also helping the price of Bitcoin soar, but most of the funds actually just flowed 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%.

Bitcoin prices have been rising, but altcoin prices have remained flat 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. Therefore, there will be no altcoin bull market in this round.

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With such gold-absorbing conditions, it will be 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?