Is Polkadot Crypto Market a good investment-Cryptocurrency.Mohoagd


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If investors start to look at utility over hype, DOT may do very well

If investors begin to demand more than just hype from bitcoin, the latest crypto sell-off would be good news for the DOT token.

Investors in Polkadot  can only hope that the recent 15% gain in the DOT price is a sign of greater things to come. That's what I'd like to think. I offered a bullish call on DOT in mid-January. However, previous to the recent comeback, the token price fell by 23% shortly after my piece was published.

This confirms my main concern regarding cryptocurrency in general. These asset prices were being driven up by speculators who had no idea how they would perform amid a market correction. So far, DOT, like many other crypto assets, has fallen in lockstep with the broader market.

Is correlation the same as causation? It's too soon to tell. I don't think this is the beginning of the end for cryptocurrency. It could, however, be the end of the beginning. As a result, investors may come to expect more from cryptocurrencies than just excitement.

Polkadot would gain if this were to happen. However, there may be a handful of chapters left to read in this cryptocurrency primer.

DOT is Benefiting From a Case of Mistaken Identity 

There's plenty of evidence to suggest that DOT's gains are the result of the token riding Bitcoin's coattails . At this moment, any reason for tokens to rise is excellent news.

Polkadot, on the other hand, has more in common with Ethereum  than with Bitcoin. So the fact that DOT is increasing in lockstep with BTC is a red herring on Polkadot.

It's also a good plot. Polkadot's use of parachains is a crucial factor for my positive feelings about it. These user-created blockchains are linked to Polkadot's main blockchain. This enables the movement of any data or digital asset across chains. In layman's words, it enables various coins and tokens to speak with one another.

The benefit of this is speed. That’s because the parachains take the pressure off the main chain. This allows the acalanetwork to process over 1,000 transactions per second (Ethereum processes about 30). And as more parachains are added, speed will only increase.  

Another benefit of parachains is the way they facilitate real-world utility. As I wrote in January, “For example, smart contracts created on the Ethereum blockchain can interact with a parachain that is geared toward a different kind of information. And the transactions can be processed in parallel.” 

This is why it’s being said that Polkadot is creating the internet for blockchains. As an investor who is a fan of a value beyond price, you can see why I could get excited about the long-term case for Polkadot.  

But the Problem Is …

Investors appear unconcerned. Yes, DOT is still among the top 15 cryptocurrencies (as measured by market capitalization). However, the token is not currently being rewarded for its utility.

Not to mention Ethereum 2.0, which is set to arrive this year. The switch to a proof-of-stake (PoS) network will address some of Ethereum's most pressing challenges at this moment.

If this is the case, many investors may conclude that instead of investing in an Ethereum alternative, they should simply invest in Ethereum.

The Bottom Line

The broader issue I have with Polkadot and other cryptocurrencies is that the very decentralization that makes them appealing also means that there is nothing to prohibit competitors from entering. As the quantity of tokens grows, it becomes more difficult for any single token to stand out.

DOT, for example, is not the only token dubbed the "Ethereum killer." However, it appears that cryptocurrency investors are not enthusiastic about this gain. And, as Josh Enomoto points out, the recent volatility in DOT is pushing investors away from the token for the time being, despite its technological merits.

What is Polkadot

Polkadot, like many post-Bitcoin cryptocurrencies, is both a token and a decentralized protocol that can be purchased and traded on exchanges like Coinbase.

The Polkadot protocol is intended to allow unconnected blockchains to securely communicate with one another, allowing value or data to transfer between, instance, the Ethereum and Bitcoin blockchains without the need for an intermediary. It's also intended to be fast and scalable, thanks to the deployment of numerous parallel blockchains (or "parachains") that offload much of the processing demand from the main blockchain.

The Polkadot token (DOT) has two primary tasks inside the Polkadot network: it is a governance token, allowing holders to have a vote in the protocol's future, and it is used for staking, which is how the Polkadot network verifies transactions and issues fresh DOT. As part of your investment strategy, you can buy and sell DOT on exchanges such as Coinbase.

Like Ethereum and other altcoins, Polkadot is a high-quality crypto with big upside potential. But it could remain volatile in the near term.

Polkadot is a high-quality cryptocurrency with a lot of room for growth.

As cryptocurrencies are under pressure, I've recently advocated that it's best to focus on higher-quality names. Ethereum  and Cardano are two examples . Along with both promising names, Polkadot  can be added to the list.

Why? It has a strong catalyst, for starters. Memecoins like Shiba Inu  aren't based on the "greater fool idea." Polkadot's major catalyst, similar to Ethereum's 2.0 upgrade catalyst and Cardano's Hydra upgrade catalyst, is the development and rollout of its cross-chain capabilities.

Polkadot's network's unique characteristic may enable its native token to experience above-average price gain in the long run. That said, the crucial phrase here is "long-term." We could see more near-term volatility in the digital asset area as the Federal Reserve's fiscal policy shifts from risk-on to risk-off.

However, if you're a long-term crypto bull, just as buying Ether and Cardano on the cheap could be a smart move, doing the same with Polkadot could be smart in hindsight.

What Makes Polkadot a High-Quality Crypto

The parachain catalyst lies at the heart of what makes DOT-USD a high-quality cryptocurrency. What exactly is it? To begin, let's look at how this token blockchain works and why the token's recent developments and future plans give it a great potential of increasing in value over time.

Polkadot's main feature is its emphasis on cross-chain communication. To put it another way, the capacity to conduct transactions across multiple blockchains. This is one of its primary qualities, as I already stated in June. 

Interoperability is critical for decentralized finance (DeFi) to become mainstream. Even if Ethereum and/or the Ethereum killers dominate the DeFi market, a platform like this may carve out a niche and become lucrative.

Polkadot, on the other hand, is still a long way from being the "internet of blockchains." For the time being, the emphasis is on the early expansion of the company's capabilities. Polkadot began with its main relay chain, often known as its blockchain. 

Then it's only a matter of adding parachains. These parachains, which are leased out to third parties, use the main relay chain to confirm transactions.

It recently finished its first round of parachain auctions, as you may have heard. As a result of this progress, the network's utilization will rise, and the value of its native token, DOT-USD, will rise as well. But keep one thing in mind once more. Long-term gains will almost certainly be matched by short-term volatility.

Expect it to Continue Moving Wildly

The Fed's shift from dovish to aggressive fiscal policy, which is aimed at bringing inflation under control, has kept crypto under pressure. The central bank stated in December that it will accelerate the reduction of its bond-buying program and raise interest rates three times during the next year.

polkadot staking,buying polkadot, interest rates reduced the appeal of risky assets like cryptocurrency, prompting a sell-off across the board. Some people believe that the market has already factored in future monetary tightening. However, based on recent events, I wouldn't jump to that conclusion just yet.

Cryptocurrencies saw yet another severe sell-off on January 5. The release of the Fed's monthly meeting minutes provoked this. The minutes revealed, among other things, that interest rates may rise considerably sooner than projected. 

In short, the Fed's hawkish pivot's entire scope is unknown. Cryptocurrencies may stay under pressure as the market more precisely prices them in.

So, how does this affect Polkadot? While it has dropped more than 50% since early November, it is currently trading at around $25 per token, suggesting that it could return to levels observed last summer (between $10 and $15 per token).

The Verdict on DOT-USD

Polkadot is making progress toward its internet of blockchains aim with its parachain auctions last month. DOT-USD might be valued many times what it trades for now if it continues to make advances and cross-chain demand develops as DeFi takes off.

Risky assets will likely be under pressure as the Fed becomes more hawkish in its fight against inflation. For long-term investors, this may not be a significant concern. However, it is critical to remember this. Before it re-hits its previous high and starts hitting new highs, DOT-USD might drop as low as $10.

Polkadot should be on your radar if you're trying to buy high-quality cryptos on recent and potential weakness.


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