There are some big movements across the cryptocurrency market board and one of the big moves of the day comes from Polkadot (DOT).
According to CoinMarketCap, DOT is now the third-largest cryptocurrency by market capitalization (excluding stablecoins) after overtaking Ripple’s embattled XRP token, which has now slid into the fourth position.
After gaining 15.5% in the past 24 hours to trade at $16.40, DOT now has a market cap of $14.7 billion compared to Ripple’s of $13 billion.
DOT’s rally of 76% gains in the past week has played a significant role in helping the digital asset dethrone XRP – which is down 11% in the same period – from the third spot.
The flipping of XRP by DOT is a convergence of two factors. The first one is DOT’s rally in the past year. By this time last year, Polkadot was trading at $2.94. It has gained 400%+ in this period.
The second reason has everything to do with XRP and its damaging battle against the U.S. Securities and Exchange Commission (SEC).
The XRP token rallied to a high of $0.65+ in late November at the time when the bitcoin bullish run was gaining steam, but the lading digital currency had not yet reached its peak recorded in December 2017.
XRP pulled back to around $0.44 on Dec. 16 before recovering to $0.6 two days later.
The SEC lawsuit against Ripple was filed a few days later and it marked the beginning of XRP’s downfall. The token has lost more than 50% of its value since then and has shed nearly $10 billion since the enforcement action.
Polkadot is a heterogeneous multi-chain platform developed by Dr. Gavin Wood, one of the co-founders of Ethereum. It is fully interoperable and allows customized side chains to connect with public blockchains.
It can scale and process thousands of transactions per second and is in competition with Ethereum, the most used blockchain in the world.
The protocol launched its latest update, Rococo para-chain testnet in December. The Polkadot community claims that the latest update is bringing in partners to the protocol.
It is the success of the update launch and the subsequent interest in the protocol that could be driving the token’s momentum.
As the DeFi train gains more steam, it leads to congestion on the Ethereum network and the calls for scaling grow louder. DOT benefits from this.