As prices for bitcoin and other cryptocurrencies continue to surge this year, many traders are looking for any indicator for when – or if – the bull market will end. Some are convinced that they have the answer: They are exploring polkadot (DOT), the native sign of the Polkadot blockchain, as potential canines in the coal mine for cryptocurrency.
As of press time, the price of polkadot was at $ 12.49, up 12.40% in the last 24 hours, according to Messari. It reached its highest ever of $ 13.22 during the early hours of trading in the US, just six days after the bitcoin price reached an all-time high.
Polkadot’s market capitalization has surpassed XRP and litecoin and is now the fourth largest cryptocurrency by market cap, according to asset tracker Messari.
Following in the footsteps of EOS 2017
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Those who use polkadot to prognosticate the price point of bitcoin are similar to another altcoin, EOS.
Sources who spoke to CoinDesk as well as social media users, especially on Chinese language platforms, see similarities between the 2017 bull market prices of bitcoin and EOS, the native cryptocurrency for blockchain platform EOS.IO. They said that Polkadot, a project started by Ethereum co-founder Gavin Wood and considered to be one of the so-called “Ethereum killers,” shared the similarities and goals of the EOS.IO project, also born with the ambition of replacing Ethereum.
After the bitcoin price peaked in the 2017 bull run, many investors and traders took their profits and moved to tokens such as EOS, a period of time now known as the “alt season.” EOS prices reached an all-time high at the end of April 2018, after which a “crypto winter” was reported.
Claims that EOS and bitcoin prices are linked in 2017 and 2018 are controversial.
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“Correlation, not causality,” said Terry Wilkinson, chief operating officer at Tokyo-based investment firm Anchor Value. EOS “was the newest pie-in-the-air protocol at that time and as such carried a lot of hype during that cycle. The bull run did not stop because the EOS stopped pumping. He was kind of the poster kid for that run. “
Block.one created EOS.IO in September 2017. The blockchain provides a platform for developers to create decentralized apps (dapps) with the promise of improved scalability compared to Ethereum. The project was also known for its initial coin offering (ICO), which ran from summer 2017 to June 2018, and is arguably the longest running ICO in history.
With many of its tokens being turned over to hedge funds to manage and make the majority of the building’s investments in the EOS.IO ecosystem, traders and investors took the EOS price as an indicator of capital inflows to crypto at the time. When the price of EOS stopped pumping, many took it as a signal to leave the market.
Read More: EOS Revisited: Investors Look at the Longest Running ICO
EOS.IO added “catch up to Ethereum’s position and hype,” added Jason Kim, chief investment officer at Anchor Value. “Speed alone didn’t convince enough people to buy into rosy EOS projections.”
Polkadot bull case at bitcoin 2020 rally
Similar to EOS.IO, Polkadot is touted as a promising blockchain that could replace Ethereum dominance. It caught the attention of many vibrant digital asset investors especially when devolved funding (DeFi) exploded last summer.
Most of DeFi’s projects are built on the Ethereum blockchain, the second-largest blockchain, which is thought to be “the world’s computer” because of its versatility and programmability. Yet, some projects have chosen Ethereum alternatives for improved scalability and an end-user experience, with Polkadot being one of the more popular.
As a result, so many investors back in 2017 were betting on EOS.IO for their promise to grab Ethereum’s market share at the time, investors have now shown a “strong” desire for DOT Polkadot, as CoinDesk reported two months ago according to. .
Read More: As DeFi grows, investors look to Polkadot to be the Next Ethereum
That said, many have expressed their doubts about DOT’s possible correlation with bitcoin’s latest bull run. The main drivers of this round are drastically different from 2017, which were then boosted by retail investors for the ICO boom.
Nowadays, the market has largely agreed that DeFi’s large institutional investors and explosive sub-sector that started last summer are the main power behind the latest bull market.
Read More: DeFi is hot but retail interest is nowhere near the ICO Frenzy
The rationale behind the two bull runs is completely different, according to Simons Chen, executive director of investment and trading at Hong Kong-based crypto lender Babel Finance. Investors who bought bitcoin in this round have not been taking profits from many altcoins like polkadot.
“[DOT] will certainly fill the same slot as EOS did the last bull run, ”said Wilkinson. “There are similarities to be drawn since then [Polkadot] he probably has the highest expectations as the new chain on the block, but my opinion is that this bull run is different than the last mainly due to the involvement of institutional funds that were largely vacant during a run 2017. ”
And unlike the ICO boom, many traders and analysts say, DeFi’s fast-growing domain – semi-autonomous exchanges and lenders – has shown much more potential with an ambitious goal to replace the traditional financial one. day.
Indeed, although the “DeFi summer” has cooled, the sector is still quite active. DeFi Multiple tickets have seen two-digit growth in the past few days. Brian Brooks, acting head of the US Currency Regulator’s Office (OCC), wrote in a Financial Times selected about the future of “self-driving” banks backed by the DeFi sector.
So the rapid price growth at DOT could be a reflection of DeFi’s continued growth, as well as new upgrades and enhancements on the project.
Denis Vinokourov, Bequant’s head of research, said the recently released 2021 roadmap from SushiSwap, a decentralized interchange that includes integration with Polkadot, could be the reason why the price of DOT has been up.
SushiSwap (SUSHI) prices have also increased since the announcement, up 14.63% in the last 24 hours to $ 5.5 at the time of writing, according to Messari.