As bitcoin struggles to break through the $40,000 barrier and begin a recovery, the altcoin market is stealing the show. Polkadot (DOT) and Kusama (KSM), in particular, have stood out with valuations of 12% and 36%, respectively, over the past week.
In both cases, the valuations were the result of major announcements about the progress of the projects.
In the case of Polkadot, Master Ventures, an Asian blockchain incubator, announced the launch of a $30m venture capital fund called the Master Ventures Polkadot VC Fund. The fund will support and finance projects that wish to integrate into the Polkadot network using parachain functionality.
According to market experts, the announcement is positive for both Polkadot and Kusuma, which is currently the main parachain project in Polkadot. KSM should soon benefit from this investment.
The uptrend is not over yet
Although DOT and KSM have appreciated in recent days, cryptocurrencies can still generate more profits for investors.
Mira Christanto, a researcher at data analysis firm Messari, believes the uptrend will continue. Since May, the analyst has been highlighting the potential of tokens.
According to Christanto, 65% of the DOT's supply is linked to the activities of parachains. In other words, they are blocked and out of circulation.
What's more, the next parachain auction will take more crypto-currencies out of circulation. Thus, the new blockades should further increase the bullish potential of DOT.
"After the launch of parachains, 40% of DOTs could be tied up in parachains, reducing the effective supply in circulation to just 15%," said Christanto.
On the other hand, she points out that lower participation in Polkadot and Kusama auctions could leave DOT and KSM with lower demand than expected. As a result, cryptocurrency prices could fall back.
