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Altcoins have risen sharply in response to Bitcoin’s resurgence multiple times this season. At the time of writing, most alts were trading in the green on their one-day price charts, as Bitcoin surpassed $51.8K. Some alts, on the other hand, were less affected in contrast. Kusama was one such coin that relied on Polkadot for its profits.
With coins surging on the back of BTC gains, is now a good time to add Polkadot and Kusama to your portfolios, and what will happen when prices fall?
Over the last one week, both DOT and KSM gained market capitalization and offered ROIs close to 35%. The previous rallies of these altcoins were primarily due to increased investment inflows, an increase in the number of active addresses, and on-chain activity.
In case of Kusama, for instance, the alt saw an almost 40% price jump last week after the Kusama network commenced the second installment of highly successful Kusama parachain slot auctions on September 1st. Kusama being a testnet or Canary Network for Polkadot, the pump in price was seen for DOT too, which made 37% gains after the announcement.
While the two alts have historically had a correlation with the price of BTC, the current surge following the parachain announcement was an indication of spontaneous growth. The same can be said regarding the network and its price in the future. Crypto-analyst Qiao Wang made a similar assessment for Polkadot, stating that ecosystems such as Solana, Polkadot, and Polygon have attained “escape velocity.”
Escape velocity indicates that there is an organically developing ecosystem of developers that does not require the core team to engage in brute force marketing or development acquisition. Polkadot gaining escape velocity was a promising indication for Kusama as well.
Trade volumes supporting rallies
Notably, in addition to positive price action, Kusama and DOT both experienced a massive increase in trade volumes on August 31. Kusama had its highest traded day in a year, with 10x trade volumes compared to the previous day. After that, when volumes decreased, DOT prices remained stable, but Kusama encountered significant resistance at $400.
Nonetheless, when comparing the two networks, the network strength of Polkadot and Kusama allows for widespread acceptance and price movement. This also indicated that if the broader market drops and a correction occurs, the two alts will be able to hold well due to their network strength.
Thus, it seems like in the near future, both Polkadot and Kusama could be a good addition to the portfolio.