The DOT Polkadot token is showing a staggering 180% gain in 2021, overtaking XRP as the fourth largest by market capitalization.
Polkadot is a multi-chain protocol that contains many “parachains” similar to the Ethereum dye. DOT works with its own Substrate technology.
The platform is fully interoperable across different blockchains while maintaining the ability to process thousands of transactions per second. Pillar 3.0, which will bring compatibility with Ethereum, is expected to launch in the first half of 2021.
Positive news led to growth
According to Polkadot creator Gavin Wood, the emergence of projects such as Acala and Moonbeam, with a focus on Ethereum interoperability, has boosted the value of DOT. Acala is Polkadot’s gateway to decentralized finance, and Moonbeam is an Ethereum-compatible suite of smart contract hosting tools.
On February 9, Binance Labs announced a $ 2.4 million investment in the Plasm Network, a smart contracts platform powered by Polkadot. Plasm is a well-known umbrella filter that supports layered scaling and Ethereum solutions.
A week ago, on February 2, the Manta Network completed a $ 1.1 million funding round to create a fully decentralized private exchange at Polkadot. Groth16-proof Zk-SNARK uses the same encryption technology as Zcash (ZEC).
On the same day, the cryptocurrency provider of the sold product exchanged 21Shares Bitcoin Cash (BCH) for DOT. These investment vehicles are listed on the SIX Swiss Exchange.
Even though it was listed on major exchanges less than six months ago, Polkadot’s token activity and price rises are thought-provoking. According to Nomics, the $ 700 million transparent daily volume is in line with major digital currencies like LINK and Litecoin (LTC) from Chainlink.
What’s even more exciting is that the DOT price movement somehow seemed to be waiting for Bitcoin in the past two months.
Altcoins usually mimic the movement of the bitcoin price throughout the day.
Overall, there are a lot of intraday performance similarities between Bitcoin and altcoins. However, sporadic changes are to be expected, but it is rather unusual for the same pattern to be repeated more than three times a month.
However, some of these altcoins sometimes anticipate the movement of bitcoins. For DOT, this effect can be partly explained by the decline in trading volumes and the fact that 68% of the total supply is locked in quoted portfolios.
In the example above, the DOT price increase occurred three hours before Bitcoin. More interestingly, the local summit and the subsequent climb followed the same pattern.
While less volume usually provides more volatility, this is not a reason for a specific alternative currency, Bitcoin.
As explained above, on January 25, DOT was the first to reach new heights. He was also the first to launch a downtrend. Of course, the two described events can be exceptions.
Ironically, this pattern appears to have repeated itself, although it ranges from three 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 of the factors behind these projected Bitcoin movements could be smaller cryptocurrencies, and some of them won’t be repeated, leading to false alerts.
However, the alleged actions of the Ministry of Transport over the past two months looked unusual.
Once again, DOT, of course, managed to achieve a sharp jump in BTC on December 24-25. This time, he failed to predict the BTC peak after that. However, in recent months it has been a good indicator of pumping.
Can the pattern be random?
Finding the cause and effect of such short-term trading distortions is nearly impossible. Some of the large mutual funds involved in various cryptocurrencies can explain the current unique price movement.
However, the above context seems like an odd coincidence, not the result of an organized strategy. The same can be said for the myriad of false positives and counter-moves that happened exclusively with DOT that Bitcoin hasn’t replicated.
Of course, no one knows if the Polkadot indicator will continue to be useful in the future, but monitoring seems to be paying off right now.