Popular crypto analyst Benjamin Cowen says Polkadot (DOT) is entering price discovery on the heels of the highly anticipated parachain auctions.
In a new strategy session, Cowen says DOT is likely breaking out a huge range that it’s been stuck in for most of 2021.
“The price appreciation right now is in anticipation of [the parachain auctions]. A lot of different projects would like to be on Polkadot. Unlike Ethereum, where any ERC-20 token can just be launched… with Polkadot you actually have to go through an auction. Only the ones that ultimately win those auctions can actually be on Polkadot.
“At some point, we’ll certainly sustain when we the break out, whether it’s here, whether it’s a few months from now. I do think Polkadot is a good project and I have high expectations as we continue to navigate this market cycle.”
To get an idea of how high DOT could be headed this cycle, Cowen takes a look at its valuation against Bitcoin (DOT/BTC) and Ethereum (DOT/ETH).
“If you look at its Bitcoin valuation, it’s not actually at an all-time high yet. For DOT to get to a new all-time high against Bitcoin it would need to rally another 24% or 25% from the current prices. For a constant Bitcoin, [it] would take Polkadot up to approximately $62 or $63.
For Ethereum, for DOT/ETH’s valuation to get to an all-time high, it would need to run another 117 [to] 120% from the current valuation. For a constant ETH… that means Polkadot, to get to a new DOT/ETH all-time high we would need to get to $111.”
Cowen says as long as Bitcoin stays above the bull market support band, which is a combination of the 21-week exponential moving average (EMA) and the 20-week simple moving average (SMA), he expects DOT to remain strong moving forward.
“DOT’s going to have a very bright future ahead. The main thing now is just to make sure Bitcoin stays relatively healthy.
As long as Bitcoin is above the bull market support band, I think the general direction for DOT should be up, even if it does have some shakeouts along the way.”
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