Thursday, September 29

3 reasons why Polkadot is on the way to a new ATH even after a 256% rally


Polkadot’s (DOT) recent 256% rally over the past 56 days has been spectacular. Although the price is 23% below its all-time high of $ 49.80 from four months ago, the altcoin’s $ 39 billion market cap has outperformed Ether (ETH) by 66% in the past thirty days.

Polkadot / USDT. Source: Bybt.com

Polkadot is a blockchain network designed to support several application-specific interconnected parallel chains, known as parachains. This scalability-focused project splits transactions into many chunks and processes them in parallel, similar to what ETH 2.0 aims to achieve.

Polkadot refers to the entire ecosystem of parachutes that connect to a single base platform known as a chain of relays. This base layer provides network security and handles voting consensus, purpose, and logic.

To support parachain launches, users vote for projects by blocking DOT tokens. Currently only Kusama, Polkadot’s “Canarian” network and an early, unrefined release from Polkadot, is holding their own auctions for these slot machines. Polkadot is expected to start the same process in the next few months.

Increase Polkadot Integration to DeFi

The Polkadot ecosystem has been growing steadily and on September 8, SubQuery, a decentralized data aggregator, raised $ 9 million to build Polkadot’s first data aggregation layer.

As an example of this integration, Moonbeam parachain has tokens built into the Polkadot development tool (Substrate). These tokens can be seamlessly sent to Ethereum wallets and smart contract addresses. On September 9, Moonbeam announced a partnership with Pool, a decentralized liquid equity derivatives protocol currently implemented on Ethereum and Terra.

The latest update came from dTrade, a decentralized exchange. After successfully raising $ 6.4 million in a seed funding round in May 2021, the DEX put together another $ 22.8 million market-making fund designed to provide “deep liquidity” backed by some of the creators. largest market share of cryptocurrencies.

Related:Governance Proposals and Layer Two Releases Give Altcoins a Boost

Derivatives data show potential for a new all-time high

Technical analysts are quick to make price projections, but investors should look at Polkadot derivatives data. For example, a non-existent futures contract premium means that investors are not comfortable creating bullish positions using leverage.

Polkadot futures add open interest. Source: Bybt.com

DOT futures total open interest increased to $ 685 million from $ 360 million in 30 days and this is a positive indicator because it reflects the willingness of leverage traders to keep their long positions open despite the rally.

In futures trading, both longs (buyers) and shorts (sellers) equalize at all times, but their leverage varies. Eventual imbalances are reflected in the funding rate and derivatives exchanges will charge the side that uses the most leverage to balance its risk.

Constant protocol development will be the last DOT price boost

Polkadot perpetual futures 8-hour funding rate. Source: Bybt.com

In the first week of September, a healthy dose of optimism was reflected because the 8-hour financing rate reached 0.10%, which is equivalent to 2.1% per week. However, the situation reversed after the 35% price drop on the morning of September 7.

This intraday low of $ 22.70 from a week ago may seem irrelevant as the DOT price is above $ 36, but traders’ appetite for leveraged longs has yet to recover from this.

The most likely case is a “glass half full” scenario in which investors will regain confidence as the project continues to operate.

The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You should do your own research when making a decision.