Here’s what happened in crypto today

Crypto venture capital rose sharply in the first quarter, snapping three consecutive quarters of declines. Bitcoin and Ether options worth $2.4 billion are set to expire on May 3, raising the likelihood of increased market volatility. Meanwhile, Block has pledged to invest 10% of its gross profit from its Bitcoin-related business back into the cryptocurrency each month.

Venture capital pours billions into crypto startups

Venture capital investments into crypto startups rose sharply in the first quarter, as funding rose in lockstep with the bull market.

According to Galaxy Research, venture capital firms invested $2.49 billion into blockchain and crypto startups between January and March, an increase of 29%. A total of 603 deals were funded. The capital growth followed three consecutive quarters of decline.

“This was the first rise in both capital invested and deal count in 3 quarters, perhaps signaling that Q4 2023 was the “bottom,” although a continuation of QoQ increases — and a more meaningful increase — would confirm that over the coming quarters,” the report said.

Infrastructure startups accounted for 24% of the total capital raised, led by EignLayer’s $100 million funding round. Web3 firms captured 31% of the total capital raised.

Bitcoin and Ether options worth $2.4 bilion set to expire

Bitcoin BTCUSD and Ether ETHUSD options contracts worth a combined $2.4 billion are set to expire on May 3, which could lead to increased market volatility.

A Bitcoin options contract is a derivative contract that allows investors to speculate on Bitcoin price movements without owning Bitcoin itself.

There are two types: call and put options. Call options give investors the right to buy a cryptocurrency at a specific price before a certain date. Put options, on the other hand, allow investors to sell a cryptocurrency at a particular price before the expiry date.

On May 3, a total of 23,367 Bitcoin contracts worth $1.39 billion are set to expire. Data from the Deribit exchange reveal that the put-to-call ratio for Bitcoin options contracts is currently at 0.5, with a maximum pain point of $61,000. The maximum pain point refers to the price at which the asset will cause financial losses to the greatest number of holders.

Similarly, a total of 334,248 Ether contracts with a notional value of $1 billion are expected to expire on Friday as well. These expiring contracts have a put-to-call ratio of 0.37 and a maximum pain point of $3,000.

The expiry of options contracts has historically been followed by short-term price volatility in the spot crypto market. Bitcoin and Ether have experienced bearish pressure in the past couple of weeks.

Jack Dorsey’s Block is ‘DCA’ing’ into Bitcoin every month

Twitter co-founder Jack Dorsey said his fintech firm Block, Inc. will flip 10% of its gross profit made off its Bitcoin products into buying Bitcoin every month.

“Going forward, each month we will be investing 10% of our gross profit from Bitcoin products into Bitcoin purchases,” Dorsey wrote in a May 2 shareholder letter inclusive of its better-than-expected first-quarter results.

“We were one of the first public companies to put Bitcoin on our balance sheet,” he added. Block bought $220 million worth of BTC across Q4 2020 and Q1 2021.

“Our investment in Bitcoin transcends technology; it is an investment in a future where economic empowerment is the norm.”

Block’s Bitcoin gross profit for the first quarter of 2024 through customer sales with its Cash App business was up nearly 60% year-on-year to $80.1 million. 10% of this amount could buy it around 1,350 BTC at its current price of $59,250.

Additional reporting by Geraint Price, Ana Paula Pereira, Sam Bourgi and Felix Ng.