Polkadot (DOT) was a relatively small cryptocurrency project hardly a year ago but now it has overtaken both Cardano (ADA) and Ripple (XRP) and even USD Tether (USDT) to become the fourth most valuable cryptocurrency in the world. It now lies just below Bitcoin, Ethereum and Binance Coin (BNB) in the charts.
Polkadot is hardly a year old and it seems like it has already made its mark on the crypto world. Launched back in the mid of 2020, the cryptocurrency envisaged multiple blockchain ecosystem with interconnectivity between Bitcoin and Ethereum as well. The coin model was also a step forward from the conventional realm in which a Proof-of-Stake (PoS) based approach was used. This allowed much of the DOT’s supply to be locked away in staking contracts, thus limiting the readily available coins in market.
This helped propel DOT upwards and it has now gone above traditional strongholds like XRP, Litecoin, Bitcoin Cash as well as newer projects like Cardano, etc. DOT’s price index has increased more than 7 times during the last five months or so from $5 to around $38.
image source: TradingView
A recent phenomenal increase is being attributed to DOT’s innovations like the new parachain auctions that will take place soon. Parachain auctions allows users to connect multiple blockchain-based systems with each other. This mechanism also known as “cross-chain message passing-lite,” is currently under the final phase of development and will then be put up for voting on the Polkadot’s consensus-based approach. Slot auctions will also be determined by this decentralized voting mechanism.
Polkadot is however, being viewed as inflated asset by some traders because of its monumental rise. Now Bitcoin has arguably appreciated better during the course of last five months, but Bitcoin is 11 years old and had a lengthy 3-year bear window before things started to look better again. Polkadot has no doubt a more innovative platform but it will need some time to find its feet in the crazy, volatile crypto market. So, a price correction may well be on the cards in the near future, especially if the crypto market enters a bearish phase once again.
It in natural for the cryptocurrency market to see big price upticks in promising new cryptocurrency projects. However, many aren’t able to sustain this growth and eventually cool off. This can be gauged from the fact that IOTA, DASH, Monero, NEM, NEO, and various other cryptocurrencies have gotten as high as 4th in the charts but they are nowhere near the top nowadays. So, while Polkadot’s upwards move was impressive, sustaining it will be a far bigger challenge.
Image source: Wikimedia Commons
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