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Why is Dotcoin experiencing a big fall (Dotcoin crash)?

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Why is Dotcoin experiencing a big fall? Dotcoin experienced a significant drop

Why is Dotcoin experiencing a big fall (Dotcoin crash)?

Why is Dotcoin experiencing a big fall? Dotcoin experienced a significant drop recently.

Since October 2020, the market value of cryptocurrencies has been continuously rising. As of the time of writing, the total market value is 4.56 billion US dollars. Since the beginning of this year, this number has increased by more than 300%. Despite the price drop, its market share remains quite stable. With the impact of Bitcoin’s halving, its price has also fallen. In the past 24 hours, 8 out of the top ten cryptocurrencies by market capitalization have experienced sharp declines, including EOS, XRP, and LTC. However, ADA, BCH, and ETC have seen significant growth.

According to data from cryptocurrency data company CoinMetrics, within less than a month, the price of DOT has increased by more than 30%, reaching nearly 300%. This is the highest level since 2018, and this increase is consistent with the price fluctuations during the ICO bubble period at the end of 2017.

Currently, the price of DOT is around $0.007 (about two months), which has soared by more than 80% compared to the previous historical high; ETH is $0.089. (Note: A new round of bull and bear market will come after 7 days).

Why has DOT performed so poorly in recent weeks? This is because DOT holders cannot use any other protocol to create or sell their funds. This situation usually occurs within a quarter. Therefore, they need a way to put themselves at risk—that is, not participating in activities on the Ethereum network. If investors do not have enough portfolio to purchase tokens in these projects, they can exit. Once the investment plan ends or starts by the end of 2021, they will not be affected.

To solve these problems, there are two methods:

1. Choose a platform with less liquidity as the collateral pool. This means that investors cannot obtain these cryptocurrencies through other protocols. The more ETH pledged, the more value they will lose. If users are willing to bear higher costs and avoid losses, they must leave.

2. Look for alternative solutions. For example, deposit ETH into a wallet. This may incur new fees and increase liquidity. If traders want to provide more ETH in the coming days, it may also become more expensive. If voting is required for collateral, there is no need to invest a large amount of funds to maintain liquidity. If the amount pledged is not sufficient to pay interest, the system will close all functions (such as collateral services); when the average distribution rate of liquidity drops below 1, the system will reopen the withdrawal channel within 6 to 12 hours in the future; if the pledged amount is less than 1 million US dollars, the possibility of resuming withdrawal channels is low.

In addition, considering the change trend of indicators such as the amount pledged and the total value of pledges, we believe that the two main altcoins on the market, DOT, DCR, and BAT, also have significant performances.

Dotcoin Crash

According to coindesk reports, Dotcoin (DOT) has been plunging since June. The price at the time of writing is $0.04, and it has dropped by about 80% in the past three days. According to the analysis website of CoinDesk, the price of DOT rose from $0.077 to $0.052 within 4 hours, but the DOT price has risen sharply below $0.139, currently quoting $0.018. In addition, Dotcoin community members have also initiated a proposal to suspend the development of DOT tokens, which aims to write the protocol code into the public blockchain and reduce its normal operation time by more than half.

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