Polkadot's DOT token is seeing an impressive 180% gain in 2021 so far, surpassing XRP for quaternary place past market capitalization.

Polkadot is a multichain protocol that has several "parachains," like to Ethereum shards. DOT works on its proprietary applied science called Substrate.

The platform is fully interoperable between different blockchains while maintaining the ability to procedure thousands of transactions per 2nd. Substrate 3.0, which volition bring Ethereum compatibility, is expected to launch in the first half of 2021.

Positive newsflow has been fueling the rally

According to Polkadot creator Gavin Forest, the emergence of projects like Acala and Moonbeam, focusing on Ethereum compatibility, helped fuel the growth in DOT's value. Acala is Polkadot's gateway into decentralized finance, while Moonbeam is an Ethereum-compatible toolkit for smart contract deployment.

Binance Labs announced on Feb. 9 a $2.4 1000000 investment in Plasm Network, a Polkadot-based smart contract platform. Plasm is a leading parachain candidate supporting Ethereum and layer-ii scaling solutions.

A calendar week earlier, on Feb. 2, Manta Network airtight a $1.ane million funding round to create a fully private decentralized exchange on Polkadot. It uses zk-SNARKs with Groth16 proofs, the same cryptographic technology used in Zcash (ZEC).

On that same day, the cryptocurrency provider of substitution-traded product 21Shares replaced Bitcoin Cash (BCH) with DOT. Those investment vehicles are tradable on the Swiss Half dozen exchange.

Despite being listed on major exchanges less than six months ago, Polkadot's token activity and price growth are listen-blowing. Its $700 meg in daily transparent volume has matched major altcoins similar Chainlink's LINK and Litecoin (LTC), according to Nomics information.

What'due south more intriguing is that DOT's price activeness has seemed to somehow anticipate Bitcoin'due south over the past two months.

Altcoins ordinarily mimic Bitcoin intraday toll action

Commonly, there is a very high intraday performance resemblance between Bitcoin and altcoins. That existence said, occasional differences ought to exist expected, but it is quite unusual for a blueprint to repeat itself more than three times in a month.

Bitcoin (blue) vs. Polkadot (orange), Feb. 8. Source: TradingView

Nonetheless, sometimes 1 of these altcoins anticipates BTC movements. For DOT, this result can be partially explained by its lower trading volumes and the fact that 68% of the full supply is locked in staking wallets.

In the above example, the DOT price hike happened a whole three hours ahead of Bitcoin. More interestingly, its local peak and subsequent rally also followed the same pattern.

Although decreased book commonly brings more volatility, this is not a reason for any given altcoin to front-run Bitcoin.

Bitcoin (blue) vs. Polkadot (orange), Jan. 25. Source: TradingView

As shown above, DOT was the beginning to make new highs on January. 25. Information technology was likewise the starting time one to initiate a downtrend. Certain enough, the two events displayed could accept been an exception.

Oddly, this pattern seems to have repeated, although varying from three hours upward to 22 hours in advance.

Bitcoin (blueish) vs. Polkadot (orange), Dec. 29. Source: TradingView

The above chart depicts another DOT rally and subsequent acme that happened earlier on Dec. 29 and thirty. Again, numerous factors could be behind these predictive Bitcoin movements by smaller cryptocurrencies, and some volition not be replicated, thus creating faux alerts.

Nevertheless, DOT'due south assertive movements have seemed unusual over the last two months.

Bitcoin (blueish) vs. Polkadot (orange), Dec. 24. Source: TradingView

Once more, DOT was able to front-run a BTC rally on December. 24 and 25 assertively. This fourth dimension around, it failed to predict BTC'southward top afterwards. Nonetheless, it has served equally a expert pump indicator in the by few months.

Could the pattern exist a strike of coincidence?

It's almost impossible to pinpoint the cause and result of such short-term trading distortions. Some large investment funds participating in diversified crypto baskets could explain the current unique price action.

The above correlation seems to exist an odd coincidence rather than the consequence of a structured strategy, however. The same tin be said for the many false positives and opposing movements that happened exclusively to DOT that Bitcoin did not replicate.

Of course, no one knows whether the Polkadot indicator will continue to be helpful moving forward, but keeping a close heart on it seems to be paying off for now.

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