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Optimism Leads the Way as Venture Capital Crypto Funding Recovers

Published April 4, 2024 11:10 AM
Valdrin Tahiri
Published April 4, 2024 11:10 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Venture capital investment in crypto increased over 50% in March.
  • Optimism received the highest amount of funding at $85 million.
  • Can the renewed funding spark a significant bounce for the OP price?

Venture capital funding in crypto has been steadily decreasing since the end of 2011, accelerating after the collapse of FTX in November 2022. However, it has made a minor resurgence in 2024, especially visible in the number of companies receiving funds.

Since Optimism has been the biggest beneficiary, traders are wondering if this increase in funding will positively affect the OP price, causing a significant bounce at the $3 level.

Venture Capital Funding Recovers

In March, Venture Capital investment in crypto increased over 50% compared to February, reaching $1.16 billion. This is the highest monthly value since November 2023.

While the total amount of investment  is still well below the all-time high of $6.1 billion from November 2021, the number of companies that received funding is encouraging. In total, 179 companies did, marking the highest number since the 216 in March 2022.

Crypto Fundraising Trend
Crypto Fundraising Data | Credit: RootData

An interesting observation is that projects that deal with infrastructure received the highest number of funds at $282 million, followed by Decentralized and then Centralized Finance (DeFi & CeFi) at $228 and $85 million, respectively.

Animoca Brands, Binance Labs and NGC ventures were the three biggest capital providers, while most of the projects that received funding were on Ethereum, followed by Polygon and BNB chain.

Categories of Investment
Investment Categories | Credit: RootData

Optimism led the way  with a $89 million private token sale, while Zama, a startup that deals with cryptography received $73 million in its series A funding round.

OP Price Prediction: When Will the Price Bounce?

The OP price has fallen since reaching its all-time high of $4.86 on March 6. The decrease confirmed a deviation (red circle) above the $4 horizontal area, which now acts as resistance (red icons).

The downward movement was preceded by bearish divergences (green) in the 3-day RSI and MACD . Such divergences often mark the cycle top after a significant upward movement. This seems to be the case for Optimism.

Will OP Price Continue Correcting?
OP/USDT 3-Day Chart | Credit: TradingView

The wave count suggests that the OP price has completed a five-wave upward movement and is now in an A-B-C corrective structure. Since the price trades just above the $2.90 horizontal and Fib support area, it can initiate a significant bounce toward the next resistance at $4, completing the B wave.

Afterward, the price can complete wave C and its entire correction near the 0.618 Fib retracement support level at $2.40. In any case, a short-term bounce is likely based on the price action and wave count.

Relief Rally Incoming

It is possible the Optimism price is not done correcting yet in the long-term. However, a short-term bounce is expected due to the wave count and because the OP price trades above support. The bounce could continue until the next resistance at $4 before another potential reversal.

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