Polkadot has been seeing tremendous momentum in recent weeks, with the cryptocurrency now securing its position as the sixth-largest digital asset by market capitalization.
Its monumental growth in recent times has allowed it to pass the market cap of Litecoin, Cardano, Bitcoin Cash, and other major cryptocurrencies.
It appears that there are a few trends and factors driving the uptrend that has allowed DOT to gain 120 percent over the past several days.
From a technical perspective, a surge in trading volume coupled with a strong market structure have warranted the gains it has posted in recent weeks, leading analysts to expect further upside.
The addition of Polkadot margin trading on Bitfinex may also be contributing to its current strength.
Narratives regarding the importance of layer ones to compete with Ethereum have also bolstered DOT’s growth, as network congestion and high fees have led investors to set their sights on ETH alternatives.
At the time of writing, Polkadot is trading up over 20% at its current price of $6.44. This marks a notable surge from its daily lows of $5.13 that were set during a fleeting overnight selloff.
The cryptocurrency is now trading down marginally from its daily highs of $6.50, and mounting trading volume coupled with a strong market structure seems to indicate that upside may be imminent.
While speaking about DOT’s technical outlook, analyst Cantering Clark explained
that it is being driven by an “awesome” low time frame trend.
“Look how clean DOT is looking. Awesome LTF trend. Ton of volume coming in. This is a good horse to have in the race.”
One factor that may be directing volume to the cryptocurrency is the addition of Polkadot margin trading on Bitfinex, which was announced in a recent blog post.
They note that, while DOT’s overall liquidity remains limited compared to that of Bitcoin and Ethereum, users will be limited to maximum leverage of 3.3x.
Flourishing layer one narrative boosts DOT
One of the primary drivers behind Polkadot’s growth may be narratives regarding the importance of layer one Ethereum competitors.
The booming DeFi ecosystem – which is primarily built on top of Ethereum – has been causing the network to see immense congestion with ultra-high transaction fees.
As such, investors are looking towards layer one alternatives – like Polkadot – that may be able to capture some of Ethereum’s market share in the mid-term. Clearly, DOT is the preferred Ethereum-competitor amongst investors.
Luke has had a long interest in financial technology, especially cryptocurrency and blockchain. With a Bachelors degree in Journalism and Media, Luke is dedicating his writing skills for the digital currency sphere.He can be contacted at email@example.com