Here's Why Near Protocol (NEAR) Rose Over 35% This Week

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KEY POINTS

  • Near Protocol is one of the few top 50 cryptos to post a price increase this week.
  • It just completed a second fundraising round and the amount of money invested on its platform is up over 170% in the past month.


Near Protocol nears its all-time high, what's next?

Near Protocol (NEAR) rose over 12% in only 24 hours to a peak of just over $19 -- up over 35% in seven days. It's since fallen back slightly, but came close to January's all-time high of $20.44, according to CoinGecko data. The smart contract crypto is one of the few top 50 cryptos bucking a slightly downward overall crypto trend. Read on to find out what Near Protocol is, what's driving the increase, and what it means for crypto investors.

What is Near Protocol?

Near Protocol is one of many platforms for decentralized applications, like Ethereum (ETH) or Solana (SOL). According to its website, "NEAR is a decentralized application platform with the potential to change how systems are designed, how applications are built and how the web itself works."

It aims to provide an intuitive platform that's scalable and easy to use. It says it is the only community-run cloud that's strong enough to power the open web -- commonly referred to as Web 3. No doubt other platforms would disagree, but Near Protocol's white paper argues its system can grow while also maintaining real decentralization, and that it's building a new business model for developers and entrepreneurs.

Why is Near Protocol surging?

There are several potential reasons for NEAR's recent price action. Let's look at them one by one.

1. It just raised $350 million in funding

NEAR's latest funding round was led by hedge fund Tiger Global, and attracted investment from well known companies like Republic Capital, FTX Ventures, Hashed, Dragonfly Capital, ParaFi Capital, and others. This comes on top of a $150 million investment round led by Three Arrows Capital, Alameda, and Jump just three months ago.

As Ethereum struggles with high gas fees and network congestion, a number of alternatives are competing to gain market share. One key aspect is to attract developers and encourage people to use each platform, and funds aimed at developers are one way to do this. For example, NEAR will use some of the money it's raised to fund the development of projects in its ecosystem.

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A useful metric in measuring smart contract cryptos is total value locked (TVL) -- the amount of money on a platform. According to DeFi Llama, Near Protocol's TVL has gained over 170% in the past month. NEAR is now in 14th place in terms of TVL with over $1 billion on its system.

2. Barry Silbert revealed his company's NEAR holdings

Barry Silbert, founder and CEO of Digital Currency Group, tweeted this week that NEAR was the company's third largest crypto holding. DCG's biggest holdings are:

3. Speculation about a NEAR stablecoin

Rumors often drive crypto price action. Cryptocurrency projects don't have to follow the same reporting rules as, for example, securities registered with the SEC. That lack of transparency is one reason prices can jump on the slightest whisper.

In this case, according to Decrypt, a newsletter from a crypto trader speculated that Near Protocol would launch a dollar-pegged stablecoin called USN which would pay an "attractive" yield. Decrypt pointed out that there's "scant evidence" to support the claims but said the Twittersphere was already buzzing, which probably helped fuel NEAR's price rise.

What it means for investors

Near Protocol is a solid cryptocurrency project that's been gaining traction. It's announced some interesting partnerships, and the big crypto names involved in its fundraising efforts are a strong sign.

However, there are many cryptocurrencies in the smart contract race. It's important to look at NEAR alongside its competitors and see how it compares. For all that people talk about finding the next Ethereum, we're most likely to see five or six main players emerge ahead of the pack. NEAR may be one of these, but the race is only just getting started.

Don't buy Near Protocol on the back of rumors or because it's jumped recently. Instead look at whether you think it is a good long-term option that will fit with the rest of your investments. As with all crypto investments, the golden rule is to only invest money you can afford to lose. That way, if NEAR suffers a security incident or the whole crypto market crashes, it will be a near miss rather than a near death experience.

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