DOT, the native token of the Polkadot network, has been a strong performer in the crypto market. With the asset rising 8.2%, is the time right to buy DOT? Let’s find out real quick.
Polkadot: An Alternative To Ethereum
Founded in 2016, Polkadot aims to support web decentralization and address issues in the original Ethereum project.
Polkadot is an open-source sharding multichain protocol that facilitates the cross-chain transfer of any data or asset type, thereby making a wide range of blockchains interoperable with each other. Polkadot was developed by the Web3 Foundation and Parity Technologies. It is built on Substrate, which enables the trustless distribution of information.
The network enables the building of smart contracts and new blockchains, and tokens. The Polkadot blockchain uses a tweaked version of the popular proof-of-stake protocol called nominated proof-of-stake (NPoS).
The DOT token serves as the governance asset for the network. DOT tokenholders have the privilege to vote on proposals on the blockchain. It is also used for network fees and to create parachains in the Polkadot ecosystem.
Parachains are one of the core components of the Polkadot project, which describes independent chains that have their own tokens on the network. Another important component in the network is Parathreads.
Parathreads operate under a ‘pay-as-you-go’ model, making them a short-term offering. While parachains are secure through auctions, parathreads are not.
Blockchain projects looking to join the Polkadot protocol have the opportunity to choose between launching on the parachain structure or the parathread architecture.
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DOT Battling At Critical Support
DOT has a market cap of $18 billion and is currently ranked at the 9th spot on the top 10 charting cryptos in the market.
DOT was trading at the price of only $9.044 at the start of 2021 but has since moved up from that range. It climbed to the $40 level on February 20, when a broader rally brought several cryptocurrencies to new record highs.
The coin’s value dropped back to the $30 level in March and rose to $44.67 on April 17. On May 15, DOT reached its all-time high of $49.69. However, the May crypto market crash saw DOT drop more than 50% to $15.49 a month later.
DOT’s price currently is at $18.66, with a 24-hour climb of 8.22%. The surge in DOT’s price shows it’s returning the bullish sentiment, so now might be the time to buy DOT.
DOT Technical And Fundamental Analysis
DOT is trading below the 20-day moving average (MA) support at $18.36, showing a bearish trend on the trading chart. Its relative strength index (RSI) is also above the oversold level at 50.30.
Nevertheless, investors who want to buy DOT should not be discouraged as the analysts in the crypto market believe that the cryptocurrency is still going to double in value.
Wallet Investor has put its 1-year prediction at $46.633 while its 5-year forecast is at $159.319.
Meanwhile, the Polkadot project has achieved the final core functionality outlined in its whitepaper. Its sister network, Kusama, recently completed the first parachain slot auction. The parachain auctions will enable blockchain platforms to launch on the Polkadot ecosystem.
This is because the Kusama network would be bridged to Polkadot in the future for cross-network interoperability.
Polkadot’s ecosystem is brimming over with innovative startups and smart solutions. At press time, the total number of Polkadots projects stood at 481.
Polkadot is a top ten crypto project. It achieved this feat not only because of its market cap. The project has also made significant progress due to its unique role in enabling a decentralized web.
Founded in 2016 by Dr. Gavin Wood, Polkadot aims to make it possible for blockchain platforms to communicate with one another.
In the last 24 hours, the value of the protocol’s governance token DOT has nose-dived, but this should not impact your decision if you want to buy DOT.
This article will look at the value proposition of the fabled ‘Ethereum killer’ and if this may be a good time to buy DOT for the long haul.
Polkadot: Heterogeneously Sharded Multi-Chain Solution
Created to herald in the decentralized web, Polkadot is the brainchild of the famous Solidity language developer Dr. Gavin Wood.
According to Wood, Polkadot is meant to deliver on the promises the Ethereum network could not bring into reality.
Sporting a tweaked version of the popular proof-of-stake protocol called nominated proof-of-stake (NPoS), Polkadot is a heterogeneously-sharded multi-chain crypto protocol that enables the building of smart contracts and new blockchains and tokens.
In addition, these blockchains hosted on its Relay Chain will be interoperable, meaning they will exchange information and value.
This sharded-design approach will make the blockchain network upgradeable without a network fork, making it future-proof.
Polkadot is an open-source project by the Web3 Foundation and Parity Technologies.
It is built on Substrate, which allows the trustless distribution of information.
The DOT token serves as the governance token for the network. DOT holders have the privilege to vote on proposals in the network. It is also used for network fees in the Polkadot ecosystem.
Blockchain platforms looking to join the Polkadot protocol can choose between launching on its parachain structure or its parathread architecture.
Parachains are independent chains that have their tokens operating in the Polkadot ecosystem. A parachain spot is secured in an auction. Parathreads are also similar to parachains, but it operates under a ‘pay-as-you-go’ model, making them a short-term offering.
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DOT: Threading The Bearish Tide
The bears have overrun the crypto market in the last few months. With cryptocurrencies coming under more regulatory scrutiny, market confidence has been at an all-time low. Large-cap cryptocurrencies like Bitcoin have struggled in the $35,000 mark for months now.
Along with other crypto protocols, DOT has seen its price action sit in the red zone for some time now. At press time, the multi-chain token sits at a low of $12.624, down 3.60% in the last 24 hours. This could be a great time to buy DOT for a bargain.
The reason is due to DOT’s historical price performance in the first five months of the year. Trading at $8.8 on January 1, DOT surged 5,000% to $48.36 on April 17.
It retested this price action and rose to an all-time high (ATH) of $48.68 on May 15.
However, this was before the May crypto market crash, which saw DOT dip more than 50% to $15.49 a month later. Even though it has continued to struggle, it has not been able to break above the $17.04 resistance level so far.
DOT Technical And Fundamental Analysis
The crypto market has been in a tight spot for the last two months, and DOT has also seen its value deplete by the day. The digital asset is trading below the 20-day moving average (MA) support of $15.257, indicating a bearish trend. Its relative strength index (RSI) stands dangerously close to the oversold level at 32.69.
However, if you believe in the numerous uses cases of the Polkadot project, a near negative RSI should not stop you from buying DOT.
Market analysts believe that the token is still going to rally. Wallet Investor has put its 1-year forecast at $56.066 while its 5-year forecast is at $215.853.
Polkadot is readying its blockchain for its parachain auctions. Currently ongoing in its sister network, Kusama, parachain auction will enable blockchain platforms to launch on the Polkadot ecosystem.
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This week started with a great deal of promise across the board, with cryptocurrencies doing quite well. The Polkadot price has been one of the best performers, following in the footsteps of other large-cap assets and posting promising gains.
Still, some investors might be skeptical about whether to buy Polkadot or not. Bull runs can be snipped at any point, and no one wants to be left holding the bag. The analysis below examines some of the nuances surrounding the Polkadot price and how best to approach the asset if you’re looking to make a purchase.
Polkadot Crypto Recent Price Movement
Like many assets, Polkadot has been working to climb back after suffering from May’s rout. The market downtown tanked the Polkadot price by 72 percent, moving from $49.91 on May 16 to $13.66 on May 23.
The past month has been a struggle for recovery. However, bullish sentiments haven’t been enough to sustain the Polkadot price. It has been unable to break through $30 since, although its current price peg of $24,7 represents an 80 percent jump from its May bottom.
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Of course, the rise above $20 only came as a result of the gradually returning bullish sentiment. Many large-cap assets have been on the move, and some investors have been moving to buy Polkadot as well. The asset’s price is a 15.7 percent jump over the past 24 hours, making Polkadot the best-performing cryptocurrency on CoinMarketCap’s top 10 list.
Polkadot Crypto Technicals
Bears had tried to sink the Polkadot price as recently as Friday. While they succeeded, it was only for a brief period. Its relative strength index (RSI) has been at healthy levels since then, and Polkadot appeared to have been one of the assets that investors flocked to when the bullish sentiment came.
Although the Polkadot RSI crossed the 80 mark briefly on June 13 and 14, it is back down to healthy levels of 52.6
Polkadot is also just above its 20-day moving average of $24.6. Its 50-day exponential moving average (EMA) of $25 is still above, and that price will have to act as a resistance for now. With how much the Polkadot price has risen in the past 24 hours, the smart money will bet on positive market sentiment pushing it past the $25 line before the day runs out.
A breakout across the $25 line could set Polkadot finally across the $30 mark. But, sustained bearish pressure could push it down to $19.6.
Polkadot’s Fundamentals
As a blockchain protocol, Polkadot gets a great deal of news quite well. However, the Polkadot price remains tied to Bitcoin, like many other large-cap cryptos.
Still, the news has been coming in. Last week, Stake Technologies – the parent company of Plasm Network and Shiden Network – announced that it had raised $10 million in commitments to help blockchain projects built on Polkadot and its subsidiary, Kusama. As the company explained, the funds will be deployed to help it complete a successful parachain lease offering (PLO) on Polkadot and Kusama.
Top U.S.-based exchange Kraken also launched a Parachain Auction Platform last week, enabling clients to pledge support for Kusama projects fighting for parachain slots on the blockchain. Rewards for contributors can include early participation bonuses, referral bonuses, and even token airdrops.
With Kusama’s ecosystem gearing up for a launch, there is a lot of adoption for both blockchains coming up. Increased use of Polkadot and Kusama’s tokens will definitely boost their price, and if the current bull run sustains, these assets could very well eclipse their yearly highs soon enough.
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About Jimmy Aki PRO INVESTOR
Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.