3 reasons why Polkadot could be the next altcoin to hit a new all-time high

Published at: Aug. 31, 2021

Layer-one smart contract platforms increased their market share throughout August after the Ethereum network London hard fork did little to solve the major issues of high transaction fees and network congestion. 

One top 10 protocol that has been gaining momentum but whose native coin, DOT, has yet to experience a significant price breakout to new highs like some of its competitors is Polkadot, a multichain protocol focused on facilitating the creation of cross-chain bridges between separate blockchain networks.

Data from Cointelegraph Markets Pro and TradingView shows that after bottoming out at $10.36 on July 20, the price of DOT increased 205% to an intraday high at $31.70 on Tuesday as the chatter of an impending alt season begins to rise.

Three reasons for the increasingly bullish outlook for DOT are its upcoming parachain auctions, a rapidly growing ecosystem of projects interested in launching on the network, and a steady increase in daily trading volume.

Parachain auctions excite the community

One of the biggest drivers of momentum for the Polkadot ecosystem is the upcoming parachain auctions where projects vie for community votes to obtain one of the limited slots available to launch on the network.

The upcoming $DOT parachain auctions should drive up demand for Polkadot. The token rewards for the $KSM auctions have been amazing, and I'm accumulating and staking $DOT in anticipation of this. pic.twitter.com/AehiTuyfSw

— CRYPT0SM0G (@Crypt0Sm0g) August 27, 2021

Polkadot’s “wild cousin,” Kusama, has been in the process of conducting its auctions, with the first batch having been chosen at the end of July and the second batch of auctions scheduled to begin on Wednesday, Sept. 1.

As part of the parachain crowdloan process, users vote for projects by locking up DOT tokens for a designated term as a way to bootstrap funding for projects that are chosen to fill one of the limited slots.

This has the effect of reducing the circulating supply of tokens available, adding pressure on the price of DOT. The Polkadot network will undergo its own parachain auctions once all auctions are complete on the Kusama network. The process has been fully audited, and to date, the Kusama-based parachains are running smoothly.

An entire ecosystem of projects are competing for parachain slots

Another reason for the recent strength of DOT is the large number of projects interested in obtaining a parachain slot and launching on the network.

As evidenced by the graphic above, the Polkadot ecosystem has seen extensive growth in terms of protocols and supporting infrastructure over the past year, and this is outmatched by only a small number of competing networks in the space.

With the Polkadot parachain auctions expected, it’s likely that the ecosystem will continue to expand and welcome new projects, and proof of this comes from the fact that the Kusama parachain process has thus far been relatively smooth.

Related: Will Polkadot save decentralized finance from Ethereum’s scaling problems?

24-hour trading volume on the rise

A third reason for the bullish outlook for DOT has been its surging 24-hour trading volume, which is now back at levels not seen since the market-wide sell-off in late May.

$DOT Also seeing large relative breakout volume today pic.twitter.com/ricI5dvppp

— Traderhank (@Traderhankhill) August 31, 2021

According to data from CoinMarketCap, DOT’s 24-hour trading volume surged more than 300% on Tuesday to a high of $5.41 billion as anticipation for the upcoming Kusama parachain 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 continue the smooth rollout of its auction process and clear the way for the process to begin on the Polkadot network, the demand for DOT could rise, and this could translate to higher prices for the asset. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Tags
Markets
Altcoin Watch
Altcoin
Cryptocurrencies
Auction
Polkadot
Smart Contracts
Related Posts
Kusama (KSM) price hits new highs as parachain auctions begin to take shape
Major protocol upgrades are one of the most potent sources of price movement for cryptocurrency projects as community members and investors get excited about new features and traders rush in to “buy the rumor and sell the news.” One protocol that has seen its price rise to new heights this week, despite the overall bearish conditions affecting the market, is Kusama (KSM), an experimental blockchain platform and a sister chain to Polkadot’s platform. Kusama is designed to provide an interoperable and scalable framework for developers. Data from Cointelegraph Markets Pro and TradingView shows that after dropping to a low of …
Markets / May 14, 2021
Polkadot price moves higher as parachain auctions reduce DOT’s circulating supply
This week a number of contenders are set to participate in Polkadot's first parachain auctions and this process tends to place buy pressure on DOT, while also giving aspiring blockchain projects a chance to show why they offer the most competitive solutions to the different demands that exist in the crypto sector. The ongoing Polkadot parachain auctions follow the success of similar auctions on its sister network Kusama, where projects like Moonriver (MOVR) and Karura successfully secure a parachain slot for the next year. The Kusama parachain auctions began during a downturn in the wider crypto market and played a …
Blockchain / Nov. 9, 2021
Astar (ASTR) price doubles as the network prepares to add 15 new projects in April
Following the successful completion of its initial parachain auctions, the Polkadot (DOT) ecosystem has begun to gain traction with the cryptocurrency community as the first chains begin to come online and integrate with yh Ethereum (ETH). Astar (ASTR) is one such Polkadot-based project that finished off the month of March on a hot streak after the multi-chain smart contract platform attracted the attention of retail and institutional crypto investors. Data from Cointelegraph Markets Pro and TradingView shows that after hitting a low of $0.107 on March 22, the price of ASTR has climbed 104% to a daily high at $0.208 …
Adoption / April 1, 2022
Polkadot parachains spike after the launch of a $250M aUSD stablecoin fund
Crypto prices have been exploring new lows for weeks and currently it's unclear what it will take to reverse the trend. Despite the downtrend, cryptocurrencies within the Polkadot (DOT) ecosystem began to rally on May 24 and have managed to maintain gains ranging from 10% to 25%, a possible sign that certain sub-sectors of the market are on the verge of a breakout. Here’s a look at three Polkadot ecosystem protocols that have seen their token prices trend higher in recent days. Acala launches a $250 million aUSD ecosystem fund Acala (ACA) is the leading decentralized finance (DeF) platform on …
Blockchain / May 25, 2022
Here’s 5 altcoins to study as crypto prices drop close to a 1-year low
The pain trade has been an unwelcome sight across the cryptocurrency market since the start of 2022 and over the past 24 days Bitcoin (BTC) and the altcoin prices have drifted, leading some analysts to suggest that a bear market is at hand. Despite traders' concern that another extended crypto winter could be starting, it times like these when investors can capitalize on great opportunities to pick up fundamentally sound cryptocurrencies at a discount. In that vein, here’s a closer look at several projects with strong fundamentals and a proven use case that could be good candidates for accumulation during …
Markets / Jan. 24, 2022