REPOST - Trading Competition - Crypto Academy / S6T3 - Homework post for pelon53.
This is a repost of this original post
CC: @pelon53 @steemcurator01 @steemcurator02
The name and introduction of the project token, which exchanges it can be traded on, project / technical information of the coin/ team background, etc.
Why are you optimistic about this token today, and how long do you wish it can rise?
How to analyze the token? (This can technical analysis and trading strategies learned from professor's courses) - This section is very important.
Your plan is to hold it for a long time or when to sell.
Do you recommend everyone to buy this token? Give reasons for your answer.
Any other thing you might want to share about this coin/token.
INTRODUCTION: Good day @pelon53 and every member of this great community. Welcome to my entry post for the season 6 week 3 trading competition.
The name of the token I will be trading is DOT. DOT is the native or governance token of the Polkadot network. The token serves three main functions which are, it is the governance token that grants holders the opportunity of having a say in the Polkadot ecosystem, it is also used for staking in the ecosystem, and lastly, it is used for bonding.
Polkadot is often claimed to be the next step in the evolution of blockchain technology as the project focused on security, scalability, interoperability, and innovation. In the Polkadot network, there are parallel blockchains known as parachins and these blockchains are individual in the Polkadot ecosystem and also, there is the main chain which is called the Relay Chain. Information can be exchanged between the parachains and the Relay Chain.
Some other things to know about this project is that,
Polkadot is an energy-efficient network and this can be attributed to the consensus mechanism Proof of Stake (PoS) used by the blockchain. This feature aid the use of its native currency DOT.
Polkadot platform is a sharded multichain network which means that it can process a large number of transactions and this depicts that it is pretty much scalable and this consequently brings about the wide use of its native token.
Polkadot platform is also characterized with a wide range of uses as any developer or individual can develop their custom parachain (a parallel blockchain) using Substrate which is a framework that is for creating cryptocurrencies and decentralized systems. The custom chain becomes interoperable with the Polkadot network after it has been connected and so enhances the use of the Polkadot native token.
Polkadot is also characterized by Parallel processing which is a significant improvement to blockchain network scalability in general and which also enhances the global adoption of the blockchain.
The following are some of the exchanges DOT can be traded on.
Polkadot was founded in 2016 by Dr. Gavin Wood, Robert Habermeier, and Peter Czaban and it was launched on May 26, 2020,
Polkadot is an open-source blockchain platform that makes use of proof of stake consensus protocol to secure the network, verify transactions, and also create and distribute new DOT tokens. Blind Assignment for Blockchain Extension (BABE) which is derived from Ouroboros is the protocol used by the platform. It was developed by Web3 Foundation and was adapted by Gavin Wood who is also an Ethereum co-founder.
Cross-chain transfer of assets or data between blockchains is allowed by Polkadot and this is what brings about the integration of decentralized applications in the Polkadot network. On October 27, 2017, Polkadot’s first token sale raised a total of 485,311 ETH (ETH is the currency of the Ethereum blockchain).
Just as mentioned above, the Polkadot network is characterized by a primary blockchain known as relay chain and many user-created parallel chains which are called parachains. The network validators do the securing and validating of the data across the parachains as they will ensure that transactions are spread across multiple parachains to improve scalability.
In order to become a validator in the network, it is required for one to run a node as well as stake an amount of one's DOT.
Also, Polkadot is characterized with Parathreads and Bridges. Parathreads which is similar to parachains but with a pay-as-you-go model which is more economical for blockchains that don't need continuous connectivity to the network and the Bridges allows parachains and parathreads to connect and communicate with external networks such as the Ethereum network and Bitcoin network.
In the ecosystem, there are Nominators, Validators, Collators, Fishermen.
The Nominators secure the Relay Chain by choosing trustworthy validators and staking dots.
The Validators secure the relay chain by staking dots, validating proofs from the collators and they also participate in consensus with other validators.
The Collators maintain shards by collecting shard transactions from the platform users and then producing proofs for the validator.
The Fishermen monitor the network and then report any bad behavior to validators. this role can be performed by the
Collators and any parachain full node.
Below are the reasons why I am optimistic about the token.
The Polkadot network is a sharded multichain network and this means that it can process huge transactions on several chains in parallel which improves the blockchain scalability. This feature will continue to enhance the wide use of its native currency and thereby increasing its value.
Looking at the historical price statistics, DOT has been doing great over the past few years and since its inception, it has brought about an ROI of 629.78% according to CoinMarketCap as of the time of doing this homework.
Initially, the market had been undergoing a bullish trend until November 2021. During the bullish trend period. DOT reached its All-time-high price of $55.00 and during the period of the bearish trend, DOT price collapses to $25.19 as at the end of the year 2021. This tells us our DOT follows the trend and also, ever since the market has been recovering from the downtrend, we can also see an increase in DOT price.
Also, DOT has a maximum supply of 1,103,303,471 DOT and there is about 987,579,315 DOT in circulation even though this doesn't 100% guarantee an increase in its price, it does tell us that there is likely going to be an increase in its demand which will consequently bring about a price increase and thus make it good for investment.
Moreover, DOT is currently the 11th biggest cryptocurrency by market capitalization with $20,084,079,933.53 and it is trading at a price of $20.41 and which is up by 2.37% in the last 24hrs. By the time the market fully recovers, the price might reach the all-time high or even rise beyond it.
Lastly, the integration of various decentralized applications and custom blockchains on Polkadot brings about the wide use of its native token, and also the scalability, decentralization makes the token a better prospect for investment.
In this trading section, I will be doing my technical analysis based on what the market price is saying currently, then place a live trade based on the analysis done. I will be using two powerful indicators which are the Bollinger band and RSI to locate my entry point, my stop loss, and my take profit.
I will be doing my analysis on trading view and placing my position on my Binance exchange, why am doing this is because Tradingview has more technical tools than Binance exchange and technical analysis are more comfortable at Tradingview than Binance.
- My analysis today will be based on DOT/USDT. Firstly, I added the Bollinger band to my chart at H1 and changed the default settings to 200 periods and this is because it gives a better and wider view of the market and makes me know the correct trend market structure.
- I moved to H4 to check what that price is saying because as a trader we need to understand the voice of the market. At H4 the market was retesting the upper band of the Bollinger band then I added RSI to the chart to confirm what am seeing. After adding RSI I noticed the market was in the overbought region.
- Then I moved back to the H1 time frame where I noticed a retest at the middle band of the Bollinger band then I took my entry at that point of retest. To take my entry which was a sell entry I went to my Binance to take the sell position using a risk-reward of ratio 1:1 to place my stop loss and take profit, then, I confirmed my entry.
- I went back to the trade an hour later and it was in profit I waited patiently for it to hit my take profit which yielded the profit as can be seen in the image below.
Looking at the current price of Polkadot which is around $20 which is indicating that it is already going up. According to my technical analysis of the price, I noticed that at the 1D timeframe the price of Polkadot has retested the support at $16 and has bounced off the support to start a bullish trend.
Due to my technical analysis, I will be holding the coin for a long time because it has respected the support zone and has started a bull run and bitcoin is preparing to break $45k resistance, as soon as all this is done then am sure that buying Polkadot from now won't be a regret.
Yes!
I will recommend that people invest in Polkadot because it has a very strong and secure blockchain that also accommodates other coins to be built under it. With this, Polkadot has the tendency to grow well in the foreseeable future, and users or investors under the Polkadot blockchain will be in profit.
Polkadot is also listed on major blockchain like Binance exchange etc. and this will continue to make the coin so popular that investors will continue to get attracted to the coin. Polkadot also has smart and hardworking developers that are ready to work for the development of the coin ecosystem.
Polkadot has a good structure and intentions that attract users that are ready to hold the coin for some time because if people buy and dump, it will not be healthy for the blockchain at all in general. With all these aforementioned features, investing in the Polkadot blockchain will be a good decision.
CONCLUSION
Polkadot is an energy-efficient network as it makes use of the Proof of Stake (PoS) consensus mechanism. This attribute makes its native coin very promising in the cryptocurrency ecosystem
It is important for each trader or investor to carry out his or her analysis and as well carry out some research before investing in this coin or in any coin he or she wants to. Also, each trader should trade based on what he or she is willing to take risks with.