Market capitalization and ‘flippenings’ occur to be necessary reflections of worth for a lot of crypto pundits and traders.
Anybody who’s been within the recreation since 2017 will recall the heated discussions revolving across the Ether (ETH) to Bitcoin (BTC) flippening and the identical commotion was attributable to Bitcoin Money (BCH) and EOS flipping prime blockchains as they moved into the top-5.
Now merchants’ consideration has shifted to Polkadot (DOT) because the community is at present ranked top-5 cryptocurrency by market capitalization and plainly its ascension to the highest got here out of the blue.
The community goals to be a decentralized net the place its customers management functions, companies, and establishments and contributors to the challenge embrace 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. Curiously, its $600 million in weekly clear quantity has matched veterans like Bitcoin Money and Litecoin (LTC).
Moreover, DOT’s worth motion appears to be one way or the other anticipating Ether’s by 15 minutes to four hours.
Weekly clear volumes. Supply: Nomics
Small cap altcoins mimic Ether and Bitcoin worth motion
Normally there’s a very excessive intraday efficiency resemblance between Ether and its oblique opponents that target governance, oracles, and interoperability.
Ether, DOT, LINK, ATOM, XTZ, Sept. worth motion. Supply: TradingView
However, generally one among these altcoins anticipates Ether actions. For DOT, this impact might be partially defined by its decrease trading volumes and the truth that 77% of the overall provide is concentrated amongst 100 wallets.
Whereas a single $2 million promote order may influence 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 price noting that some cryptocurrencies restrict the staking or voting quantity per handle, inflicting whales to separate their holdings and additional distorting holders’ rankings. Regardless, DOT’s focus stands out, as does ChainLink (LINK) and NEO.
Subsequently, it’s no shock that any related stream on these much less distributed names causes extra influence. Though decreased quantity often entices extra volatility, this isn’t a motive for any of the cryptocurrencies studied to anticipate Ether’s actions.
Ether towards DOT, LINK, ATOM, XTZ, September 12-13. Supply: TradingView
As proven above, DOT was the primary to make new highs on Sept. 12. It was additionally the primary one to provoke a downtrend on the following day. Certain sufficient, this occasion by itself might have been an exception.
Curiously, this sample appears to have repeated, though various from 15 minutes as much as 4 or 5 hours upfront.
Ether towards DOT, LINK, ATOM, XTZ, September 9-10. Supply: TradingView
The above chart depicts two totally different rallies that occurred earlier. Each DOT and Cosmos (ATOM) anticipated the Ether rally on Sept. 9 and the following descent on the subsequent day.
Once more, quite a few components could possibly be behind these predictive Ether actions on smaller cryptocurrencies, and a few is not going to be replicated, thus creating false alerts.
However, DOT’s presence on these assertive actions appears uncommon during the last two weeks. The next chart is much more telling because the remaining cryptocurrencies remained comparatively flat in comparison with DOT’s spectacular strikes.
Ether towards 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 powerful 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 did not create new highs on Sept. 1.
Is that this pure luck or is basket trading behind the sample?
It’s virtually unattainable to pinpoint the trigger and impact of such short-term trading distortions. Some giant funding funds collaborating in diversified crypto baskets might clarify the present distinctive worth motion.
Regardless that their proportional stake in Ether is probably going increased, its worth influence could possibly be deemed irrelevant contemplating its liquidity.
Contemplating DOT’s quick trading historical past on main exchanges, the present pattern appears to be an odd coincidence somewhat than the results of a structured technique. The identical might be stated for the various false positives and opposing actions that occurred solely to DOT that weren’t replicated by Ether.
Will the Polkadot indicator proceed to be helpful? Time will inform, however for now, maintaining a detailed eye on it appears to be paying off.
The views and opinions expressed listed here are solely these of the author and don’t essentially mirror the views of Cointelegraph. Each funding and trading transfer entails threat. It’s best to conduct your individual analysis when making a choice.