08 JAN 2022 (SAT)- Polkadot (DOT) Report Card

08 JAN 2022 (SAT)- Polkadot (DOT) Report Card


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post.
  • I do hold a long position in DOT as a token holder.

1A. Top 3 Good News for DOT HODLERS !!!

2. How Polkadot Performs Relative to Other Cryptos ?

Performance of All Cryptos Under Quantdoge Watchlist in 2021 (Sorted by % Return)

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DOT has undergone 186.49% return from USD 9.361 to USD 26.8181 since 01 Jan 2021. DOT is the 23rd best performing crypto assets among others here.

3. How Resilience Polkadot Is Towards Bitcoin Crash Relative to Other Cryptos ?

Historically, all altcoins are somewhat dependent on Bitcoin price movement and it’s often the case where if Bitcoin falls, most altcoins would follow.

Top 3 Cryptos That Are Most Resilient To Bitcoin Crash During Each of BTC 4 Largest Crashes in 2021

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DOT has proven resilience against BTC crash in 0 out of the 4 instances.

During the last 4 BTC market crashes,
When BTC dropped by -13.47 %, DOT returned -37.36 % at 20 May 2021,
When BTC dropped by -13.13 %, DOT returned -10.95 % at 22 January 2021,
When BTC dropped by -12.16 %, DOT returned -8.45 % at 13 May 2021,
When BTC dropped by -11.39 %, DOT returned -23.93 % at 22 June 2021

4. Technical Analysis on Polkadot

4.1. Volume Weighted Average Price (VWAP)

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VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when DOT is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of DOT (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of DOT (blue line) to rise to its average level (orange line).

As of 07 Jan 2022, VWAP is suggesting that DOT is losing significant momentum due to overall crypto market sell-off.

4.2. Moving Average Convergence Divergence (MACD)

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MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of DOT closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that DOT is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that DOT is losing momentum. 

As of 07 Jan 2022, MACD is suggesting that DOT is losing significant momentum due to overall crypto market sell-off.

4.3. Bollinger Band

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Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of DOT
- Upper Band (orange line), which is computed by adding 2 standard deviations of DOT on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of DOT from SMA (20)
- Close (green line), which is the daily closing price of DOT

Whenever close line (green) touches the lower band (red), it indicates that DOT is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that DOT is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 07 Jan 2022, Bollinger Band is suggesting that DOT is neither overbought nor oversold.

4.4. Relative Strength Index (RSI)

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Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that DOT is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that DOT is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 07 Jan 2022, RSI is suggesting that DOT is neither overbought nor oversold.

4.5. Price and Volume

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DOT price and traded volumes are suggesting that DOT is trading in a downward trend in the past 2 months with huge volume observed during its significant dip but with only comparatively little volume during its rise. It's unclear today whether this downward trend would continue or it's in a consolidation phase now where it's being traded sideways.

Based on the technical analysis presented above, quantdoge is neutral on DOT, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

5. Polkadot Risk Profile
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Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Polkadot defined above, DOT seems to trade at a similar risk level on 07 Jan 2022 as compared to 10 days before on 28 Dec 2021, with its biggest pullback being seen at -18.64%  on a single day during the last 100 days. However, I could be wrong, hence please make your careful due diligence before making any financial decision. 

The chart above suggests that Polkadot's volatility stabilizes as the distribution of its daily return is narrower as compared to 10 days ago.

6. Price Simulation for Polkadot

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How did quantdoge simulation perform vs the actual DOT price movement over the last week ?

Over the last 7 days, DOT is trading near the median of all quantdoge simulations, indicating that DOT is neither overbought nor oversold.

7. Google Trends Analytics

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polkadot reached its peak in Google Search on 2021-02-14 with a Google Score of 100
Over the last quarter, polkadot Google Score has decreased 24.23 % from 56.75 to 43.0
Over the last 6 months, polkadot Google Score has increased 18.78 % from 36.2 to 43.0

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Over the last month, polkadot is most saught after on Google from Andorra, followed by Singapore and Slovenia.

All these three countries are classified by World Bank as high-income nations, hence, a high interest from these 3 geographical regions are bullish to DOT as their citizens are likely to have higher risk appetite and more spare cash to venture into the crypto space.

Furthermore, Singapore is a leading Asia crypto hub where many crypto funds, crypto venture capitalists and crypto entrepreneurs reside. A rising interest from crypto-supportive crypto hub is a good sign for this crypto project.

8. Developer Activity Analytics

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Fork

Fork refers to the amount of time where the Github repo of current cryptocurrency is being copied. Higher fork number could mean that this cryptocurrency project is getting more interest in the developers community who likes to explore more on the deep technical of this project.

Polkadot forks increased 12.12% from 949 to 1,064 in the past year.

Star

Star refers to the number of developers who bookmark the Github repo of current cryptocurrency. Higher star number could mean that this cryptocurrency project is getting more general interest in the developers community.

Polkadot stars increased 13.92% from 4,426 to 5,042 in the past year.

Pull Request

Pull request contributor refers to developer who has made a successful improvements/ modifications on the Github repo of this current cryptocurrency project. Higher number of pull request contributors could mean that there is a high number of commitment given by developers to this cryptocurrency project.

However, a low number also could mean that the developer community of this project applies a strict standard when it comes to code review, so only developers who have published a high quality code with highly impactful features got approved.

Polkadot pull request contributors increased 9.56% from 136 to 149 in the past year.

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If you like my analysis and articles, please follow me at @quantdoge for daily updates.

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quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

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