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.
Announcement from Quantdoge
If you are actively following my blog- Daily Crypto Risk Report, I sincerely thank you for taking the time to read my analysis, and your support is greatly appreciated. To further improve the quality of my daily analysis, I am actively making constant enhancements here and there.
I am pleased to announce that Quantdoge would be adding the Community Analytics section which you could find below in this article, where this section would look at how the community of particular cryptocurrency fares over time, and their influence on the crypto prices over the last 100 days.
In the meanwhile, Quantdoge is working hard on Developer Analytics and On-Chain Analytics features which would be gradually released over this month. Please stay tuned.
1. Top 3 Good News for DOT HODLERS !!!
-
Polkadot announces Kusama is 'finally ready to host parachains'
Statistic as of 2021-05-19 02:09 AM EDT: 53 positive votes, 1 negative vote
The rollout of the Polkadot protocol has been ongoing since August, when the project launched its Rococo testnet.
(Extracted from CryptoPanic) -
Polkadot’s Parachain Launch Phase Begins
Statistic as of 2021-05-19 02:09 AM EDT: 50 positive votes, 1 negative vote
Gavin Wood has announced that Polkadot’s Kusama canary chain is now ready to launch parachains, as well as parachain slot auctions and crowdloans.
(Extracted from CryptoPanic) -
Polkadot Adds Parachain Auctions and Crowdloans to Kusama and Westend
Statistic as of 2021-05-19 02:09 AM EDT: 33 positive votes, 2 negative votes
Polkadot has added parachain auctions and crowdloans to Kusama and Westend - two much-awaited features.
(Extracted from CryptoPanic)
2. How Polkadot Performs Relative to Other Cryptos ?
As of 19 May 2021, Polkadot has made a cumulative return of 1306.48% since Jan 2020 and 489.28% since Jan 2021. It is currently the 10th greatest performing crypto asset since Jan 2021 as compared to the other cryptocurrencies presented above.
3. Technical Analysis on Polkadot
3.1. Volume Weighted Average Price (VWAP)
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 19 May 2021, VWAP is suggesting that DOT is trading at its average price range of USD 40 to USD 42.
3.2. Moving Average Convergence Divergence (MACD)
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 19 May 2021, MACD is suggesting that DOT is gaining momentum.
3.3. Bollinger Band
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 19 May 2021, Bollinger Band is suggesting that DOT is trading at its fair value (i.e. neither undervalued nor overvalued).
3.4. Relative Strength Index (RSI)
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 19 May 2021, RSI is suggesting that DOT is trading at its fair value.
Based on the technical analysis presented above, quantdoge holds a neutral stance on the short-term price outlook of DOT, but I could be wrong, hence please make your careful due diligence before making any financial decision.
4. Polkadot Risk Profile
Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Polkadot defined above, DOT seems to trade at a lower risk level on 19 May 2021 as compared to 10 days before on 09 May 2021, with its biggest pullback being seen at - 12.42% 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.
5. Price Simulation for Polkadot
How did quantdoge simulation perform vs the actual DOT price movement over the last week ?
Over the last 7 days, DOT has been trading near the median price range of quantdoge simulations, indicating that DOT was trading at a fair value level over the last week.
6. DOT Community Analytics
Polkadot has gained the greatest amount of Reddit followers in Feb 2021, but the monthly increment of the number of followers has since gradually slowing down.
Overall, Ethereum has received a community score of 42.8% on Coin Gecko.
Based on the last 100 days of data, as compared to other cryptos, Polkadot has a rather weak correlation between the number of followers and its price movement. Therefore, the number of Reddit followers on Polkadot channel is probably not a good indicator to judge DOT performance.
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If you are into ChainLink (LINK) and Cardano (ADA), I have made similar analysis on them at:
- 17 May 2021 (MON)- ChainLink (LINK) Daily Risk Report
- 10 May 2021 (MON)- Cardano (ADA) Daily Risk Report
If you like my analysis and articles, please follow me at @quantdoge for daily updates.
