Polkadot (DOT) goes to a new ATH after a 256% gain – here’s why

Steady developments and strong fundamentals suggest that Polkadots rally (DOT) is underway towards a new all-time high (ATH).

Although the DOT has rebounded 256 percent in the past 56 days, it is still 23% below the previous ATH of $ 49.80 – set May 15.

6-hour DOT price chart | Source: Bybt.com

Polkadot is a blockchain network that supports application-specific, interconnected parallel chains, so-called parachains. The project focuses on the possibility of dividing transactions into several shards and processing them in parallel, similar to what ETH 2.0 can do.

Polkadot refers to the entire ecosystem of parachains participating in a single base platform called the relay chain. This base layer provides security for the network and handles consensus, finality and voting logic.

To support the start of the Parachain, users vote on projects by blocking the DOT token. At the moment, only Kusama – Polkadot’s “Canary” network and Polkadot’s unenhanced, early release – are running private auctions for these slots. Polkadot is expected to begin the same process over the next several months.

The integration of Polkadot with DeFi is increasing

The Polkadot ecosystem is growing steadily, and on September 8, SubQuery, a decentralized data aggregator, raised $ 9 million to build Polkadot’s first data aggregation layer. .

As an example of this integration, Moonbeam (a parachain on the Polkadot protocol that provides smart contracts and interoperability with Ethereum) has tokens based on Polkadot’s development engine (substrates). These tokens can be sent seamlessly to Ethereum wallets and smart contract addresses. On September 9, Moonbeam announced a partnership with Lido, a decentralized protocol for liquidity staking derivatives that is now being used for Ethereum and Terra.

The latest update comes from dTrade, a decentralized exchange (DEX). After dTrade successfully completed 6.4 million euros in a seed financing round in May 2021.

Derivative data show that DOT has potential for new ATH

Technical analysts are quick to make price predictions, but investors should analyze data on the DOT derivatives market. For example, a non-existent futures premium means that investors are uncomfortable building bullish positions with leverage.

DOT. Futures open contract | Source: Bybt.com

The Open Interest (OI) of DOT futures has increased from $ 360 million in 30 days to $ 685 million.

In futures trading, both long (buyer) and short (sell) orders are executed all the time, but their leverage is different. The imbalance is ultimately reflected in the funding rate, and the derivatives exchanges charge whichever side uses more leverage to offset the risk.

Stable protocol development becomes the fundamental driver of the price of DOT. be

Financing rate 8 hours for DOT .Perpetual futures contract | Source: Bybt.com

Just enough healthy optimism was reflected in the first week of September when the 8-hour funding rate hit 0.1%, or 2.1% per week. However, the situation changed after the 35% sale on the morning of September 7th.

The intraday low of $ 22.7 a week ago seems irrelevant as DOT price is now above $ 36, but traders’ appetite for leveraged long positions has yet to recover.

The most likely scenario is the “glass half full” scenario, where investors regain confidence as the project evolves.

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Mr. Teacher

According to Cointelegraph

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