Market capitalization and ‘flippenings’ occur to be essential reflections of worth for a lot of crypto pundits and buyers.
Anybody who’s been in the recreation since 2017 will recall the heated discussions revolving round the Ether (ETH) to Bitcoin (BTC) flippening and the identical commotion was brought on by Bitcoin Money (BCH) and EOS flipping high blockchains as they moved into the top-5.
Now merchants’ consideration has shifted to Polkadot (DOT) as the community is presently ranked top-5 cryptocurrency by market capitalization and it appears that its ascension to the high got here out of the blue.
The community goals to be a decentralized net the place its customers management purposes, providers, and establishments and contributors to the mission embody some well-known names like Ethereum co-founder Gavin Wooden.
Regardless of being listed at main exchanges lower than 30 days in the past, Polkadot token is mind-blowing even to skilled merchants. Apparently, its $600 million in weekly clear quantity has matched veterans like Bitcoin Money and Litecoin (LTC).
Moreover, DOT’s price motion appears to be someway anticipating Ether’s by 15 minutes to four hours.
Weekly clear volumes. Supply: Nomics
Small cap altcoins mimic Ether and Bitcoin price motion
Often there’s a very excessive intraday efficiency resemblance between Ether and its oblique opponents that concentrate on governance, oracles, and interoperability.
Ether, DOT, LINK, ATOM, XTZ, Sept. price motion. Supply: TradingView
Nonetheless, typically one in every of these altcoins anticipates Ether actions. For DOT, this impact might be partially defined by its decrease buying and selling volumes and the proven fact that 77% of the whole provide is concentrated amongst 100 wallets.
Whereas a single $2 million promote order may affect Tezos’ (XTZ) $230 million weekly clear liquidity, a $20 million promote order for Ether is a non-event as its market cap hovers round $eight billion.
Supply: Etherscan, Polkastats, Eosflare, Tezblock, Tokenview.com, Nomics
It’s value noting that some cryptocurrencies restrict the staking or voting quantity per tackle, inflicting whales to cut up their holdings and additional distorting holders’ rankings. Regardless, DOT’s focus stands out, as does ChainLink (LINK) and NEO.
Due to this fact, it is not any shock that any related stream on these much less distributed names causes extra affect. Though decreased quantity often entices extra volatility, this isn’t a purpose for any of the cryptocurrencies studied to anticipate Ether’s actions.
Ether in opposition to DOT, LINK, ATOM, XTZ, September 12-13. Supply: TradingView
As proven above, DOT was the first to make new highs on Sept. 12. It was additionally the first one to provoke a downtrend on the subsequent day. Positive sufficient, this occasion by itself might have been an exception.
Curiously, this sample appears to have repeated, though various from 15 minutes up to 4 or 5 hours prematurely.
Ether in opposition to DOT, LINK, ATOM, XTZ, September 9-10. Supply: TradingView
The above chart depicts two completely different rallies that occurred earlier. Each DOT and Cosmos (ATOM) anticipated the Ether rally on Sept. 9 and the subsequent descent on the subsequent day.
Once more, quite a few elements may very well be behind these predictive Ether actions on smaller cryptocurrencies, and a few is not going to be replicated, thus creating false alerts.
Nonetheless, DOT’s presence on these assertive actions appears uncommon over the final two weeks. The next chart is much more telling as the remaining cryptocurrencies remained comparatively flat in contrast to DOT’s spectacular strikes.
Ether in opposition to DOT, LINK, ATOM, XTZ on Sept. 1. Supply: TradingView
For starters, each Ether and DOT had been making new native highs in early September. Throughout this time DOT started a robust rally two hours forward of Ether, and it additionally initiated its pattern reversal sooner than Ether.
In the meantime, Ether peaked at $490 a lot later that day. The pattern was reversed for each cryptocurrencies on Sept. 2. This strongly contrasts with XTZ, LINK, and ATOM, which both peaked a lot later or failed to create new highs on Sept. 1.
Is that this pure luck or is basket buying and selling behind the sample?
It’s nearly unattainable to pinpoint the trigger and impact of such short-term buying and selling distortions. Some giant funding funds collaborating in diversified crypto baskets might clarify the present distinctive price motion.
Regardless that their proportional stake in Ether is probably going greater, its price affect may very well be deemed irrelevant contemplating its liquidity.
Contemplating DOT’s quick buying and selling historical past on main exchanges, the present pattern appears to be an odd coincidence moderately than the results of a structured technique. The identical might be mentioned for the many false positives and opposing actions that occurred completely to DOT that weren’t replicated by Ether.
Will the Polkadot indicator proceed to be helpful? Time will inform, however for now, conserving a detailed eye on it appears to be paying off.
The views and opinions expressed listed below are solely these of the creator and don’t essentially mirror the views of Cointelegraph. Each funding and buying and selling transfer includes danger. You need to conduct your personal analysis when making a call.