Polkadot is a multichain protocol that has a number of “parachains,” just like Ethereum shards. DOT works on its proprietary technology called Substrate.
The platform is totally interoperable between completely different blockchains whereas sustaining the flexibility to course of hundreds of transactions per second. Substrate 3.0, which can carry Ethereum compatibility, is predicted to launch within the first half of 2021.
Positive newsflow has been fueling the rally
According to Polkadot creator Gavin Wood, the emergence of initiatives like Acala and Moonbeam, focusing on Ethereum compatibility, helped gasoline the expansion in DOT’s worth. Acala is Polkadot’s gateway into decentralized finance, whereas Moonbeam is an Ethereum-compatible toolkit for good contract deployment.
Binance Labs introduced on Feb. 9 a $2.4 million funding in Plasm Network, a Polkadot-based smart contract platform. Plasm is a number one parachain candidate supporting Ethereum and layer-two scaling options.
Per week earlier, on Feb. 2, Manta Network closed a $1.1 million funding spherical to create a fully private decentralized exchange on Polkadot. It uses zk-SNARKs with Groth16 proofs, the same cryptographic technology used in Zcash (ZEC).
Despite being listed on main exchanges lower than six months in the past, Polkadot’s token exercise and price progress are mind-blowing. Its $700 million in every day clear quantity has matched main altcoins like Chainlink’s LINK and Litecoin (LTC), in keeping with Nomics knowledge.
What’s extra intriguing is that DOT’s price motion has appeared to in some way anticipate Bitcoin’s over the previous two months.
Altcoins normally mimic Bitcoin intraday price motion
Usually, there’s a very excessive intraday efficiency resemblance between Bitcoin and altcoins. That being mentioned, occasional variations must be anticipated, however it’s fairly uncommon for a sample to repeat itself greater than thrice in a month.
Nevertheless, typically one among these altcoins anticipates BTC actions. For DOT, this impact will be partially defined by its decrease buying and selling volumes and the truth that 68% of the whole provide is locked in staking wallets.
In the above instance, the DOT price hike occurred a complete three hours forward of Bitcoin. More curiously, its native high and subsequent rally additionally adopted the identical sample.
Although decreased quantity normally brings extra volatility, this isn’t a motive for any given altcoin to front-run Bitcoin.
As proven above, DOT was the primary to make new highs on Jan. 25. It was additionally the primary one to provoke a downtrend. Sure sufficient, the 2 occasions displayed may have been an exception.
Oddly, this sample appears to have repeated, though various from three hours as much as 22 hours upfront.
The above chart depicts one other DOT rally and subsequent high that occurred earlier on Dec. 29 and 30. Again, quite a few elements may very well be behind these predictive Bitcoin actions by smaller cryptocurrencies, and a few is not going to be replicated, thus creating false alerts.
Nevertheless, DOT’s assertive actions have appeared uncommon during the last two months.
Once once more, DOT was capable of front-run a BTC rally on Dec. 24 and 25 assertively. This time round, it didn’t predict BTC’s high afterward. Nonetheless, it has served as a great pump indicator up to now few months.
Could the sample be a strike of coincidence?
It’s nearly unimaginable to pinpoint the trigger and impact of such short-term buying and selling distortions. Some massive funding funds taking part in diversified crypto baskets may clarify the present distinctive price motion.
The above correlation appears to be an odd coincidence relatively than the results of a structured technique, nonetheless. The identical will be mentioned for the numerous false positives and opposing actions that occurred solely to DOT that Bitcoin didn’t replicate.
Of course, nobody is aware of whether or not the Polkadot indicator will proceed to be useful transferring ahead, however conserving a detailed eye on it appears to be paying off for now.
The views and opinions expressed listed below are solely these of the author and don’t essentially replicate the views of Cointelegraph. Every funding and buying and selling transfer entails threat. You ought to conduct your individual analysis when making a call.