Investors who have owned stocks in the past couple of years have generally experienced some big gains. But there is no question some big-name cryptocurrencies have left the stock market in the dust.
Polkadot’s Big Run: One cryptocurrency that has been a great investment in the past two years has been Polkadot (CRYPTO: DOT/USD).
The Polkadot protocol is an attempt to address some of the scalability issues with Bitcoin (CRYPTO: BTC) and other popular cryptos. The unique feature of Polkadot that differentiates it from Bitcoin is Polkadot’s system of connected blockchains. While Bitcoin has just one blockchain, Polkadot has a central blockchain that provides security for the network and side chains that increase its capacity.
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The Polkadot protocol launched in May 2020, but Polkadot’s ICO took place back in 2017 when tokens were sold at an initial price of $30. In August 2020, Polkadot completed a redenomination that increased the number of tokens each investor held by a factor of 100.
Polkadot prices started heading in the right direction almost immediately following the redenomination thanks in part to massive government stimulus spending to support the economy during the COVID-19 pandemic. Younger Americans receiving three rounds of direct stimulus payments have poured a significant chunk of that cash into investments, including Polkadot. In addition, cryptocurrency investing became extremely trendy in 2021, and Polkadot was one of the most popular cryptos in the market.
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On Aug. 20, 2020, Polkadot traded as low as $2.69 in intraday trading before bouncing and never looking back.
By Nov. 1, Polkadot was trading at $4.18. The cryptocurrency hit the $10 mark for the first time on Jan. 3, 2021.
Polkadot In 2022, Beyond: On Jan. 19, 2021, influential Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk added #Bitcoin to his Twitter bio and tweeted “In retrospect, it was inevitable.” Musk's tweet sent the entire cryptocurrency market soaring, including Polkadot.
Polkadot ultimately hit its post-redenomination high of $49.69 in May. Today, Polkadot prices have pulled back significantly and the crypto is trading back down at $7.09.
Still, Polkadot investors who bought on the day it hit its pandemic low and held on have generated huge returns on their investments. In fact, $1,000 in Polkadot bought on Aug. 20, 2020, would be worth about $2,636 today.
Given the rise in Polkadot prices in the past two years coupled with the loss of stimulus payment support in 2022, some investors are understandably concerned about just how much further Polkadot prices could fall. Polkadot and other cryptos are prone to boom-to-bust drawdowns, and Polkadot prices are already down 73% year-to-date.
