Polkadot (DOT) is seeing a staggering 180% gain in 2021 so far, overtaking XRP in fourth place by market cap.
Polkadot is a multi-chain protocol that contains many “parachains”, similar to Ethereum Shards. DOT is working on its technology called Substrate.
The platform is fully interoperable between different blockchains while maintaining the ability to process thousands of transactions per second. Pillar 3.0, which will bring Ethereum compatibility, is expected to launch in the first half of 2021.
The rally was fueled by an influx of positive news
According to Polkadot creator Gavin Wood, the emergence of projects like Acala and Moonbeam that focus on Ethereum compatibility helped fuel growth in DOT’s value. Acala is Polkadot’s gateway to Decentralized Finance (DeFi), while Moonbeam is an Ethereum-compatible suite of smart contract publishing tools.
On February 9, Binance Labs announced a $ 2.4 million investment in Plasm Network, a smart contract platform based on Polkadot. Plasm is a leading parachute filter that supports Ethereum and Layer-2 scaling solutions.
A week ago, on February 2, Manta Network closed $ 1.1 million in financing to set up a fully private decentralized exchange (DEX) in Polkadot. Uses zk-SNARKs with Groth16 guides, the same encryption technology used in Zcash (ZEC).
On the same day, the cryptocurrency provider for exchange-traded products (ETP) exchanged 21Shares Bitcoin Cash (BCH) for Polkadot. These investment instruments are tradable on the Swiss SIX exchange.
Despite being listed on the major exchanges less than six months ago, Polkadot token activity and price growth are amazing. The $ 700 million transparent daily trading volume matches major digital currencies such as Chainlink (LINK) and Litecoin (LTC), according to Nomics data.
What’s even more interesting is that DOT’s price action appears to somehow anticipate Bitcoins over the past two months.
Altcoins usually simulate bitcoin price movement during the day
Bitcoin and altcoins usually have a very similar intraday performance. However, occasional variations should be expected, but it is quite unusual for a pattern to repeat the same more than three times a month.
However, sometimes one of these alternative currencies anticipates bitcoin movements. For DOT, this effect can be partly explained by lower trading volumes and the fact that 68% of total supply is locked out in Staking portfolios.
In the example above, the DOT price spike occurred a full three hours before Bitcoin. More interestingly, its local peak and subsequent high followed the same pattern.
Although the decrease in volume usually leads to more volatility, this is not a reason for any particular alternative currency to forward-powered Bitcoin.
As shown above, DOT was the first to hit new highs on January 25th. It was also the first to start a downtrend. The two events featured could certainly be an exception.
Oddly, this pattern appears to have been repeated, although it varies from three hours to 22 hours in advance.
The chart above shows another DOT spike and a subsequent peak that occurred earlier on December 29-30. Again, many factors behind these predictive Bitcoin movements could be triggered by smaller cryptocurrencies, and some of them will not be replicated, creating false alerts.
However, the Transport Ministry’s assertive moves have been unusual over the past two months.
Once again, DOT managed to hold a bull run for BTC on December 24-25, firmly. This time, it failed to forecast a BTC higher after that. However, it has been used as a good pump indicator in the past few months.
Could the pattern be a coincidence hit?
It is almost impossible to determine the cause and effect of such short-term trade distortions. Some of the large mutual funds involved in various crypto baskets can explain the current unique price movement.
However, the link above appears to be a strange coincidence rather than the result of an organized strategy. The same can be said for the many false positives and conflicting moves that occurred exclusively for DOT and that Bitcoin has not replicated.
Of course, no one knows if the Polkadot indicator will still be useful going forward. But watching it closely appears to be paying off for now.
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