2 May 2021 (SUN)- Polkadot (DOT) Daily Risk Report

2 May 2021 (SUN)- Polkadot (DOT) Daily Risk Report


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. 
1. Top 3 Good News for DOT HODLERS !!!
  • DOT over the counter? Osprey Funds set to launch Polkadot investment trust
    Statistic as of 2021-05-02 11:09 AM EDT: 22 positive votes, 1 negative vote

    Accredited investors will soon have over the counter access to a DOT investment trust. 
    (Extracted from CryptoPanic)

  • Kusama Tests Parachain applicants on Rococo network
    Statistic as of 2021-05-02 11:09 AM EDT: 18 positive votes, 1 negative vote

    From layer-0 to the rest of the Blockchain Polkadot is a multi-chain application environment that uses its network protocol to allow arbitrary data to be passed along the Blockchain. This technology enables private and public blockchains’ apps to exchange data in secure decentralized and trustless environments. The Network was developed by top developers in the […]
    (Extracted from CryptoPanic)

  • Polkadot powered reinsurance platform UnoRe integrates with Orion Protocol
    Statistic as of 2021-05-02 11:09 AM EDT: 4 positive votes, 0 negative vote

    CryptoNinjas » Polkadot powered reinsurance platform UnoRe integrates with Orion Protocol

    Orion Protocol, a layer-2 solution that enables users to access deep, cross-chain liquidity across DEXs, CEXs, and swap pools, today announced UnoRe as the latest partner to use the Orion Liquidity Boost Plugin (LBP). This integration will provide additional liquidity to UnoRe’s reinsurance risk...
    (Extracted from CryptoPanic)

2. How Polkadot Performs Relative to Other Cryptos ?

45a87139a6f386149b2304c8b47f4845f6c37de054dde3695f7f4247de986874.jpg

As of 02 May 2021, Polkadot has made a cumulative return of 1180.29% since Jan 2020 and 442.02%  since Jan 2021. It is currently the 6th 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)

ac1b952d7e71075804b1a2cba55de2145a1fd6b7f4c024baf4977c0f747cac46.jpg

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 02 May 2021, VWAP is suggesting that DOT is trading on par with its long-term average price range of USD 35 to USD 37.50.

3.2. Moving Average Convergence Divergence (MACD)
aa9d876d1a7ee6b4056121cfcd9558cc8150369e8f5737872bf2ce6bb4ffb8ac.jpg

 

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 02 May 2021, MACD is suggesting that DOT is trading at a slightly higher momentum than its average.

3.3. Bollinger Band

5cafaf78342cd47ee59f01529036a09e041f507aff15ec265af42ca1b7ab580e.jpg

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 02 May 2021, Bollinger Band is suggesting that DOT is trading at its fair value (i.e. neither overbought nor oversold).

3.4. Relative Strength Index (RSI)

74f59930c8e81e2fbf7b8dda16122ea64099c9aefd2e2cd803a989758115cc61.jpg

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 02 May 2021, RSI is suggesting that DOT is trading at its fair value (i.e. neither overbought nor oversold).

Based on the technical analysis presented above, quantdoge holds a neutral stance on the short-term price outlook of Polkadot, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

4. Polkadot Risk Profile

c6a47a28435a67944713bf98a6048aad199ebb6926ca28d91dfbc339fc7664c2.jpg

476549c52590b2b4a3ec2ad324e8285c8c1bf8c9b707d80ad95572f2c000793e.jpg

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 02 May 2021 as 10 days before on 22 Apr 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

10e3b56dc2685b795d0e7cf4b71ca0364a37cb9d12d67dcbb1b552c4cf92a3f6.jpg

3da07d603e6fc601a4da915b68979bd679ed0f6c04ec3ca17773e96691d43b33.jpg

8ae365cfd6c441a84b8526fa5802fe2b0707cdd6222eaf3469a040324f1953ca.jpg

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

d2e5cdf99e07ec08abb1579000c83ac064ad2c2982a1e12a77021863b8130f1e.jpg

Over the last 7 days, DOT has been trading in the higher price range of quantdoge simulations, indicating that DOT was trading near at an overbought level over the last week.

bbb490509404f52574bb237001fb309f0f948373a03b24b7ea28e24b24747573.png

Are you looking for a crypto wallet which offers you an easy way to securely store your crypto while giving you the ability to earn crypto? Look no further than Coinbase, the cryptocurrency exchange and custody which has just went public in NASDAQ this month. You would get around USD 10 worth of free bitcoin if you sign up with my referral link below: 

https://www.coinbase.com/join/lim_2kx

Besides, you would also be able to earn free cryptocurrencies via Coinbase Earn program where you need to do is just complete a series of short lessons about different cryptos. 

If you are into Chainlink (LINK) and Cardano (ADA), I have made similar analysis on them at:

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

 

 

 

 

 

 


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.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.