Polkadot (DOT) is a cryptocurrency network. The base architecture within the network enables different networks to communicate, creating blockchains in the process. In some ways, it’s similar to Ethereum, which has grown to become the second largest crypto by volume behind Bitcoin. At the moment, Polkadot comes in at number 8 in terms of market captitalisation, but is rising through the ranks. Here’s why we think big things are coming up.
What’s the hype about Polkadot?
Polkadot was formed by Gavin Wood, who is a co-founder of Ethereum. As such, it’s fair to say he knows about blockchain and what’s needed in this complex universe. One of the great things about Polkadot is that it allows cross-chain communication in a much more simplified way than others. It also brings different chains together onto one network. In simple terms, it’s an architecture that is scaleable, diverse and definitely ha room to grow and expand.
In this regard, the value of Polkadot has increased in recent weeks partially due to new parachain auctions involving the network. Dates were announced for early November for these auctions, which allow bidding for projects to have use of the Polkadot network.
This is a milestone as it supports cross-chain development between different networks. WE think that this area has a lot of commercial use going forward.
Another point that will attract investors is that Polkadot is far more environmentally friendly than other coins, such as Bitcoin. The same model that allows efficiency and scalability is also one that has less of an impact on the environment via emissions.
Looking at potential levels
Let’s move away from the fundamental side of the Polkadot network to the coin itself. The price is up 18% over the past month, to trade at $40. It isn’t actually at all time highs, having traded up to almost $48 back in May this year.
We see this level at the next immediate resistance, with a move above this heading into uncharted territory. When we take a look at the last low to high rally, it had a move of 10x before correcting lower. Therefore, with the last rally starting at the $10 mark, another 10x extrapolation would take Polkadot to $100 by the end of the year before another potential correction .
On the downside, there is good support at $37, with the current trend remaining viable on a technical basis as long as we hold above $32. A break. below $26 would cause us to materially change our viewpoint regarding the coin.
Overall, we think that Polkadot could soon rise into the top 5 coins by market capitalisation. A move to $100 would still put it with a significantly lower value than Ethereum. So we are looking to buy at current level to target a move to this level by the end of the year.