Polkadot (DOT), a network protocol that allows arbitrary data — not just tokens — to be transferred across blockchains, is upwardly well-nigh 30% in the terminal 24 hours. Polkadot's market capitalization has besides surpassed $ten billion, solidifying its position as the 5th-biggest crypto asset.

There are several major reasons backside DOT'southward stiff uptrend: strong technical market structure, the anticipation of scalable blockchain networks, and the craze effectually DeFi.

DOT/USDT daily price candle chart (Binance). Source: TradingView.com

Potent technical market construction and rise sentiment

In December 2021, DOT reached a new all-time high, ascent to around $11. Since that period, it has continued to come across strong momentum and stiff recoveries at key support areas.

On January. 13, Michael van de Poppe, a full-fourth dimension trader at the Amsterdam Stock Commutation, pinpointed DOT'due south resilience.

He said that if DOT drops to key support areas, e.g. $7.five, it would likely see a rally to a new all-time high. Van de Poppe wrote:

"Polkadot is i of the strongest bouncers today equally it hit 1 of the levels I've marked previously. Probably some more consolidation, however, I think it's simply a matter of time before we come across $DOT above $xx."

Since so, DOT has rallied above $xi and reached a $ten billion valuation, firmly securing its place at the fifth spot in the top ten above Litecoin.

DOT is now a 30% rally abroad from overtaking XRP, which still has a market cap of over $13 billion despite an ongoing lawsuit by th U.S. Securities and Exchange Commission (SEC) against Ripple.

At the aforementioned fourth dimension, the cost rally is too coinciding with a surge in daily sentiment, according to data from TheTie.

DOT price and sentiment (daily). Source: TheTie

Expectations of scalable blockchain networks due to DeFi'south popularity

At the end of 2020, the total value locked in DeFi surpassed $22 billion after an explosive yr of growth.

Meridian protocols, such equally Aave, Maker, and Uniswap, all exceed a TVL of $2 billion, with Maker alone housing over $4 billion in locked capital letter.

However, 1 major issue with Defi has been the scaling issues of Ethereum. Albeit DeFi protocols are planning to movement to layer two solutions, the high fees on Ethereum have caused usability issues for DeFi users.

Maple Foliage Capital, a squad of researchers focused on Web3 speculation and building, said in their 2021 prediction that Polkadot would probable kickstart infrastructure and application improvements. They said:

"Libra equivalent / ETH 2.0 + L2 / Polkadot set off the flywheel of infrastructure prompting application improvements and vice versa, whereby ecosystems and stacks compete for capital and talent. I personally bias towards open, permissionless blockchains."

Polkadot is considered a contender to Ethereum in the sense that it allows smart contracts to run in an ecosystem of smaller blockchains, called parachains.

With parachains and a network of diverse blockchains, Polkadot is able to process information more efficiently, enabling large decentralized applications to run without scalability problems.

When parachains come live in the foreseeable hereafter, Polkadot is expected to support large-scale DeFi protocols and decentralized applications.

Overall, the combination of the optimistic technical market place structure of DOT and the positivity effectually Polkadot's smart contract infrastructure is contributing to its extended rally.