Rapidly increasing trading volume, investor excitement over the upcoming para chain auctions and the success of Kusama have investors looking at Polkadot (DOT) as the next altcoin to hit a new high.
One top 10 protocol that has been acquiring momentum but whose native coin, DOT, has yet to experience a noteworthy price breakout to new highs like one of its competitors-Polkadot, a multichain protocol focused on facilitating the creation of cross-chain bridges between different blockchain networks.
The Figures Predict A New High For Polkadot
Figures show that after dropping to $10.36 on July 20, the price of DOT increased 205% to an intraday high at $31.70 on Tuesday.
Three reasons for the increasingly optimistic outlook for DOT are its upcoming para chain auctions, a swiftly growing ecosystem of projects interested in launching on the network, and a stable increase in daily trading volume.
One of the main drivers of momentum for the Polkadot ecosystem is the approaching para chain auctions where projects compete for community votes to obtain one of the limited slots available to launch on the network.
Traders vote for projects by locking up DOT tokens for a selected term as a way to bootstrap funding for projects that are chosen to fill one of the limited slots as part of the para chain crowd loan process,
This has the effect of slowing the circulating supply of tokens available, adding pressure on the price of DOT. The Polkadot network will undergo its own para chain auctions after all auctions are complete on the Kusama network. The entire process has been fully audited, and to date, the Kusama-based para chains are running efficiently.
An entire ecosystem of projects are competing for para chain slots
The second reason for the current strength of DOT is the hefty number of projects interested in obtaining a para chain slot and launching on the network.
A third reason for the confident outlook for DOT has been its surging 24-hour trading volume, which is currently back at levels not seen since the market-wide sell-off in late May.
According to some data, DOT’s 24-hour trading volume increased more than 300% on Tuesday to a high of $5.41 billion as anticipation for the upcoming Kusama para chain auctions excited Polkadot investors who view KSM’s success as a proxy of what can occur with DOT’s price.
If the Kusama network can carry on the smooth rollout of its auction process and clear the way for the process to commence the Polkadot network, the demand for DOT could go up, and this could translate to higher prices for the asset.