What happened
The award for the best-performing top-50 cryptocurrency by market capitalization over the past week goes to Near Protocol (NEAR -0.80%). Much of this token's 21% rise over the past seven days can be attributed to today's move in this token, which has seen Near Protocol surge 6.6% higher over the past 24 hours, as of 11:30 a.m. on Tuesday.
This rapid rise appears to the the result of news that Trisolaris (TRI), a large decentralized exchange on the Near Protocol blockchain, has raised $4.5 million in a venture capital funding round. This funding round was led by Electric Capital, with Jump Crypto, Dragonfly Capital, and other investors jumping aboard.
Image source: Getty Images.
So what
For high-growth projects such as Near Protocol, venture capital funding rounds are very meaningful. Investors looking to forecast growth require a feasible road map, which includes ample funding, to justify such an investment. Today, investors appear to have exactly what they're looking for with this notable financing round.
Beyond some notable names participating in this deal, there are other factors investors seem to like. Namely, where this capital will be allocated has some investors excited. Trisolaris expects to use these funds to ramp up its hiring efforts, develop cross-chain swaps with Near Protocol, and increase total liquidity on the platform. These are all tangible factors that investors appear to believe could lead to higher growth, justifying a higher valuation right now.
Additionally, investors might be keenly aware of how Near Protocol performed, following its massive $150 million investing round, led by Three Arrows Capital, with A16Z among the participants. Near Protocol hit an all-time high following this news, leading speculators to take a hard look at this token following this funding round of its key decentralized exchange.
Now what
Financing for specific projects on a given blockchain can improve the fundamentals and investment thesis for the underlying network. In this case, Near Protocol's NEAR token is the key utility token for the Trisolaris exchange. Accordingly, should these cross-chain swaps and other ramp-up investments turn out to be successful, investors appear keen on the potential for price appreciation with NEAR tokens.
But how these funds are used, and the degree to which this capital leads to growth on Trisolaris' exchange, remains to be seen. Accordingly, there's risk with investing in Near Protocol at these higher levels.
As such, investors may want to take a cautious approach to this token, which has proved to be volatile over the past year. Perhaps another all-time high is in order for Near Protocol. But for now, uncertainty remains high in the crypto world.
