The DOT token of Polkadot has increased by 27% in the last week as the network gets ready to have its first halving event on March 14.
It is projected that the reduction in issues to come will greatly decrease the overall number of DOT tokens in supply, resulting in a greater amount of bullish behavior among the investors.
Halving event to cut the token supply by 50%
The halving event that will occur on March 14 will cut the supply of DOT tokens by 120 million to 55 million. The event is a pivotal event in the tokenomics of Polkadot.
Last year, the community voted to place a progressive reduction in token issue, which eventually places the limit at 2.1 billion tokens.
And this will be decreased every two years, giving a propensity to the production of new tokens, breeding the myth of scarcity, which will drive up demand.
Polkadot is also making staking and validator economics changes as part of its constant improvements.
A Dynamic Allocation Pool (DAP) will exist, and burns of the treasury will cease when Phase 1 of the DAP is triggered.
The tokens that would have been burnt or slashed are now sent to the DAP to be handled by the governance of the network.
The next updates will focus on increasing the security and liquidity of the Polkadot network, which will provide investors and validators with a more balanced environment.
Price surge and short-term consolidation
DOT has recorded a tremendous increase in price, with a high price of 1.75 per week on week.
This price action is after a low momentum in which DOT was traded between the ranges of $1.25 and 1.35.
Polkadot (DOT) price chart. Source: CoinGecko.
The breakout was a burst of the token as it rose up to near the point of over 1.70, which was one of its most important moves in recent weeks.
The price had a short run, and after climbing to the point of 1.75, it was met with resistance, and it took the form of a correction and went back to the area of 1.50 to 1.55 before it stabilized.
This is because the short-term consolidation is decreasing DOT by a slight 2.5% in the last 24 hours; DOT is currently trading at $1.62.
In spite of this slight setback, the token has still increased by more than 25% in the past week, indicating that the investors are optimistic about the crypto event ahead of the halving.
ETF proposals await SEC approval
The news about the proposed exchange-traded funds (ETFs) of Polkadot is also under close observation by investors.
Both the 21Shares spot Polkadot ETF and the Grayscale DOT-based ETF proposals are under consideration by the United States Securities and Exchange Commission (SEC).
Although the two proposals have been submitted and are awaiting approval, they have yet to be greenlit by the SEC.
These ETFs may also increase the popularity of Polkadot, and more institutional investors will gain access to the asset.
The success of this review is unclear; however, the fact that ETFs could get approved is contributing to the optimistic mood about Polkadot.
The DOT token of Polkadot is growing tremendously as the network is about to have its first halving.
The expected reduction in supply of the tokens, as well as the suggested changes in network economics, have resulted in higher levels of optimism among investors.
Moreover, the SEC does not provide Polkadot ETFs yet, which can also increase the popularity of the token.
With the halving date coming closer, the whole world will be watching how Polkadot will further evolve and whether it will influence the general crypto market.
The post Polkadot Rallies by 27% Ahead of First Halving Event first appeared on Coinfea.