Crypto Weekly Roundup: Polkadot Hits ATH One Week Prior To Parachain Auctions And Immediately Dips Due To ‘Sell The News’ Effect

POLKADOT’S ATH ONE WEEK PRIOR TO PARACHAIN AUCTIONS

The long awaited and highly anticipated Polkadot’s Parachain Auctions have finally got under way this week. In addition to that only seven days prior, on the 4^th of Nov, DOT (DOT/USDT) established its new all-time high at exactly $55 so thus far November has been an extremely interesting month for the investors without a shadow of a doubt. The token is currently trading at $47 (with a market cap of $49.5B; 8^th place according to coingecko.com) representing a hefty increase of nearly 40% since the 13^th of October when the co-founder of both Polkadot and Kusama (and also one of the ‘founding fathers’ of Ethereum) Gavid Wood first announced the exact date when the auctions would commence.

Now that KSM has been mentioned, Polka’s price action is, on the face of it, repeating a comparable ‘sell the news’ effect that its sister blockchain, Kusama experienced this past June over a seven day period leading up to a premiere battle for parachain slots involving crypto crowdloans in the digital assets history. We wrote about the potential for a similar situation to happen to DOT in our most recent article on the blockchain (link here) on the 30^th of October so hopefully that wasn’t a complete surprise to our most attentive readers. Obviously six months ago it was a fairly different scenery in the markets with all crypto and especially altcoins bleeding heavily for the most part, but instead of dwelling on the past let’s briefly focus on two of the strongest candidates to secure the first ever Polkadot Parachain slot through an auction.

FIRST BLOCKCHAIN TO WIN POLKADOT PARACHAIN SLOT – MOONBEAN OR ACALA?

Just several days after the start of crowdloans and there already are practically only two possible candidates to win the very first Polkadot parachain slot – namely Moonbeam and Acala, so let’s introduce them, in a nutshell, and find out what they are all about.

Moonbeam is a layer-one blockchain that is going to be compatible with the Ethereum Virtual Machine (EVM) meaning that Solidity-developed projects are going to be well matched with it enabling Ethereum developers to launch their projects on Moonbeam and integrate tools such as Metamask, Remix, Waffle etc. Users will get all benefits of EVM implementation with additional features like on-chain governance, staking and cross-chain integrations. Moonbeam’s ecosystem is already extensive and constantly growing, making the blockchain ready to hit the ground running from the very moment it gets deployed, possibly even as soon as December this year. It’s a sister chain to Moonriver, a blockchain that turned out to be the most profitable slot-winner after securing a Kusama parachain slot back in June. An investment of $500 worth of Kusama token in the project brought roughly $5000 in Moonriver asset to the investors.

The currently second-placed candidate by the number of secured DOT, the Acala project is aspiring to be the DeFi Hub of Polkadot and is also going to be Ethereum compatible and offer smart contracts. Other features will include a DEX with micro gas fees that can be paid in any tokens, then a stablecoin backed by cross-chain assets and finally they will have trustless staking derivatives in the form of liquid DOT. Both the Acala’s token (ACA) and the Moonbeam’s one called Glimmer (GLMR) will have a genesis supply of one billion each but what separates the two is the fact that the former is going to be deflationary while the latter is going to have an annual inflation of 5%.

In practice, it doesn’t really matter which blockchain wins the first slot since they both are guaranteed to secure their positions eventually. It’s going to be very exciting to follow these projects once they get integrated with the Polkadot layer-zero blockchain (relay chain) and we at cryptodaily.co.uk believe that they will sooner or later likely become top 100 tokens. Having said that, let’s change the scenery and move on to the charts to see how Polkadot has been doing on that front.

TECHNICAL ANALYSIS 

Since establishing the new ATH at $55 one week before the Parachain Auctions, Polkadot (DOT/USDT) has decreased in value significantly due to the ”buy the rumour, sell the news” effect discussed above as well as in the previous article on the token. The asset is still respecting an ascending trendline originating from the 29^th of September and it’s presently trading well above all of the important moving averages on the daily chart. If we do happen to break below this trendline, there will be a massive area of support starting at the $55 mark, a level that was acting as resistance on multiple ocassions in October as well back in April and May.

In spite of the local decline, DOT has been in a clear uptrend for six weeks now and regardless of an increased selling pressure over the recent week, we are fully expecting the bulls to take back control over the price movement soon due to the ongoing auctions that should absorb and lock up a large portion of the token causing a bit of a supply shock. Current DOT’s value below the $50 mark seems to us like an attractive buying opportunity for late investors to take advantage of in order to take part in the auctions. More updates in the coming weeks.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.