Polkadot Soars Almost 30% To $ 10 Billion Market Cap: What's Behind The Rally?

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Polkadot (DOT), the second largest good contract protocol within the cryptocurrency market when it comes to valuation behind Ethereum, is up almost 30% previously 24 hours. Polkadot's market cap has additionally surpassed $ 10 billion, cementing its place because the fifth largest crypto asset.

There are a number of essential causes behind DOT's sturdy uptrend: a powerful technical market construction, anticipation of scalable blockchain networks, and the craze surrounding DeFi.

DOT / USDT every day worth candle chart (Binance). Supply: TradingView.com

Robust technical market construction and rising sentiment

In December 2021, DOT hit a brand new all-time excessive, rising to round USD 11. Since then, it has continued to see sturdy momentum and powerful restoration in key help areas.

On January 13 Michael van de Poppe, a full-time dealer on the Amsterdam Inventory Change, identified DOT's resilience.

He mentioned that if DOT drops to key areas of help e.g. At $ 7.5, it could possible bounce to a brand new all-time excessive. Van de Poppe wrote:

“Polkadot is without doubt one of the strongest bouncers in the mean time because it reached one of many ranges I highlighted earlier. Most likely a bit extra consolidation, however I believe it's solely a matter of time earlier than we see $ DOT above $ 20. "

Since then, DOT has rallied above $ 11 and reached a valuation of $ 10 billion, firmly securing its fifth spot within the prime ten over Litecoin.

DOT is now 30% rally away from overtaking XRP, which nonetheless has a market cap of greater than $ 13 billion, regardless of an ongoing lawsuit by the U.S. Securities and Change Fee (SEC) towards Ripple.

On the identical time, the worth hike additionally coincides with a surge in every day sentiment, in accordance with knowledge from The tie.

DOT worth and sentiment (every day). Supply: TheTie

Expectations from scalable blockchain networks as a result of DeFi's reputation

On the finish of 2020, the overall worth trapped in DeFi was greater than $ 22 billion after an explosive 12 months of development.

Prime protocols, similar to Aave, Maker, and Uniswap, all exceed a TVL of $ 2 billion, with Maker alone housing greater than $ four billion in locked-down capital.

A giant drawback with Defi, nonetheless, was Ethereum's scaling points. Whereas DeFi protocols plan to transition to layer two options, the high fees on Ethereum have induced usability points for DeFi customers.

Maple Leaf Capital, a staff of researchers centered on hypothesis and constructing on Web3, mentioned of their forecast for 2021 that Polkadot is probably going kickstart infrastructure and application improvements. They said:

“Libra Equal / ETH 2.0 + L2 / Polkadot kick-started the infrastructure, driving utility enhancements and vice versa, with ecosystems and stacks competing for capital and expertise. Personally, I lean in the direction of open, permission-less blockchains. "

Polkadot is taken into account a contender for Ethereum within the sense that it allows good contracts in an ecosystem of smaller blockchains referred to as parachains.

With parachains and a community of various blockchains, Polkadot can course of knowledge extra effectively, permitting massive decentralized functions to run with out scalability points.

When parachains come stay within the foreseeable future, Polkadot is anticipated to help large-scale DeFi protocols and decentralized functions.

General, the mix of DOT's optimistic technical market construction and the positivity round Polkadot's good contract infrastructure provides to the expanded rally.