Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
On 1 August, Polkadot Insider tweeted that Polkadot [DOT] gained popularity on the social front within the last seven days.
POLKADOT SOCIAL METRICS WEEKLY RECAP
📊Dive into the social buzz around @Polkadot
🌟Over the past 7D, Polkadot has been making waves across social media platforms.
🚀The community is buzzing with excitement from discussions, mentions, and engagements
Detail👇#Polkadot #DOT pic.twitter.com/ALJslsuhvW
— Polkadot Insider (@PolkadotInsider) August 1, 2023
It is evident that Polkadot continues to remain one of the most popular blockchain ecosystems. At press time, it had a market cap of $5.9 billion, making it the 13th largest cryptocurrency.
Previously, DOT’s price rose 9% within a day of Ripple [XRP] securing a partial victory in its legal battle with the U.S. Securities and Exchange Commission (SEC) on 13 July.
The U.S. District Court of the Southern District of New York ruled in its judgement that the sale of Ripple’s XRP tokens on crypto exchanges and though programmatic sales did not constitute investment contracts; hence, it is not a security in this case. But the court also ruled that the institutional sale of the XRP tokens violated federal securities laws.
The crypto industry has lapped up the judgement instantly, generating a price rally across tokens.
Polkadot’s ecosystem continues to expand as more parachains developments come onboard. By the end of Q1 2023, over 40 parachains had won fresh auction slots on Polkadot, according to the Q1 update. The new projects include Zeitgeist and Subsocial, among others.
These new parachain developments could add upward pressure to DOT’s token value as they drive demand. Notably, a project team must win a Polkadot parachain slot auction to be connected to the core network. The parachain slot auction is settled in DOT tokens, and the project team could seek DOT from individual holders through a crowdfunding process known as “crowd loans” to help secure the slots.
To understand the potential impact of these new developments on DOT’s value, we tapped into ChatGPT to gain more nuanced insights and gauge the AI model’s apprehension of Polkadot’s ecosystem.
Asking ChatGPT about Polkadot’s past, present and future
Starting off with the basics, we asked ChatGPT to explain what Polkadot is and how its ecosystem works –
Source: ChatGPT
In summary, ChatGPT stated that,
“Overall, Polkadot’s ecosystem is designed to foster innovation and collaboration between different blockchains, providing a flexible and scalable platform for developers to build a wide range of decentralized applications.”
The “decentralized applications” are also known as “parachains.” The Polkadot ecosystem added 21 of these parachains last month, and each project team must win a parachain slot auction to gain access to the core system for a specified period of time. It is like paying for a lease over a certain agreed duration.
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To further gauge the AI model’s understanding of Polkadot, we asked it how parachain slot auction works –
Source: ChatGPT
The “crowd loan” structure of sourcing DOT tokens involves “staking” to help a project win an auction. This, simply put, is intriguing. Because of the current U.S. regulatory pressure on crypto-staking, anything structured in a manner that involves “staking” could attract regulatory scrutiny.
For example, Coinbase recently received a Wells Notice from the SEC. One of the objects of the potential lawsuit is reportedly its crypto-staking service.
So, we asked ChatGPT what crowd loan is and its legal standing in the U.S. The explanation was apt, but the AI model couldn’t affirmatively state whether crowd loans are legal in the U.S.
Source: ChatGPT
Here is ChatGPT’s analysis of the legality of crowd loans in the U.S –
Source: ChatGPT
At this point, one thing is crystal clear. parachains developments can drive demand for DOT tokens because project teams need them to win a parachain slot auction. Based on this, how will the 21 newly added parachains impact DOT’s value?
This was the AI model’s answer –
Source: ChatGPT
We need to put a figure on the above possible upward pressure on DOT’s value due to the added parachains. So, we pulled historical price data on DOT to help make future price predictions.
Some of the results issued by ChatGPT were inaccurate, with a wide deviation from price data collated from TradingView.
For example, ChatGPT stated that DOT hit a high of $52 in December 2021. On the contrary, TradingView’s data showed it at a high of $39 on 1 December, 2021.
Source: ChatGPT
The AI model is restricted from making price predictions, so we unshackled it through jailbreak techniques to get modest price prediction values for DOT. We had to ask the AI model to break down DOT’s historical price data in 2021 to use it for the predictions.
Surprisingly, the results were different from the previous output.
Source: ChatGPT
The results noted little deviation from TradingView’s data, compared to the previous output. The jailbreak version is known to give outrightly false information, but this particular instance was slightly different.
On the other hand, the classic version resorted to attaching a direct link from CoinMarketCap to help track historical price data.
Source: ChatGPT
However, it is worth noting that the AI model tracks different sites to collate data on cryptocurrency prices. These sites sometimes have different real-time price values for crypto-assets and could explain the price deviation witnessed in the initial and second outputs.
Next, we nudged ChatGPT to predict DOT’s price by the end of 2023 and 2024 based on the above historical price data.
Although the classic version put forth its typical disclaimer, the jailbreak version predicted DOT’s price to reach $40-$60 by the end of 2023.
Source: ChatGPT
We stretched ChatGPT to extrapolate the same data and give a modest average value of DOT by the end of 2024. The AI model set DOT’s price at $60-$80 by the end of 2024.
Source: ChatGPT
Not everyone has the patience to wait for long-term prospects. So, what do DOT’s short and mid-term prospects look like? The daily chart could offer some clues.
Looking at DOT’s daily price charts
Source: DOT/USD, TradingView
At press time, DOT was trading at $4.94. Its price fell more than 5% within a week.
When we look at its on-chart indicators, there is no hope for the coin in the short term.
Both its Relative Strength Index (RSI) and Money Flow Index (MFI) rested much below the neutral 50-mark. Its On Balance Volume (OBV) also showed a downtick.
In conclusion, DOT’s short-term prospects seem bearish. However, we must keep a close watch on emerging developments in the industry that may impact its performance.
Conclusion
As an AI tool, ChatGPT is capable of understanding complex technical information. It has an apt understanding of the Polkadot ecosystem and how the development of its parachains impacts DOT’s price action.
Based on recent developments and overall market sentiment, ChatGPT forecasted that DOT’s price in 2023 and 2024 could hit $60-$80, respectively.
Source: https://ambcrypto.com/chatgpt-polkadot-price-prediction-20/