Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
Colin Wu recently reported that Polkadot’s [DOT] development agency has announced a new community-based plan. The network plans to deploy $22.08 million and 5 million DOT tokens to help projects make a meaningful impact in the future.
However, the announcement had no positive development on DOT’s price. At the time of writing, it was trading at $3.7387.
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Polkadot had a market cap of $4.6 billion at the time of writing, making it the 14th largest cryptocurrency.
Previously, the price of DOT rose 9% within a day of Ripple [XRP] In mid-July, the company achieved a partial victory in its legal battle with the US Securities and Exchange Commission (SEC).
The U.S. District Court for the Southern District of New York ruled in its judgment that sales of Ripple’s XRP tokens on crypto exchanges and through programmatic sales did not constitute investment contracts; Therefore, it is not a certainty in this case.
But the court also ruled that the institutional sale of the XRP tokens violated federal securities laws.
The crypto industry immediately adopted this assessment, generating a price increase for tokens. But no sign could support the price increase.
Parachains on board Polkadot
The Polkadot ecosystem continues to expand as more parachains developments come on board. By the end of the first quarter of 2023, more than 40 parachains had won new auction slots on Polkadot, according to to the Q1 update. The new projects include Zeitgeist and Subsocial.
These new parachain developments could put upward pressure on DOT’s token value as they drive demand. Specifically, a project team must win a Polkadot parachain slot auction in order to connect to the core network. The parachain slot auction will be settled in DOT tokens, and the project team could seek DOT from individual holders through a crowdfunding process known as ‘crowd lending’ to help secure the slots.
To understand the potential impact of these new developments on DOT value, we leveraged ChatGPT to gain more nuanced insights and gauge the AI model’s understanding of Polkadot’s ecosystem.
ChatGPT questions about the past, present and future of Polkadot
We started with the basics and asked ChatGPT to explain what Polkadot is and how the ecosystem works –
Source: ChatGPT
In summary, ChatGPT stated:
Overall, Polkadot’s ecosystem is designed to foster innovation and collaboration across different blockchains and provide a flexible and scalable platform for developers to build a wide range of decentralized applications.
The ‘decentralized applications’ are also called ‘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 certain period of time. It is the same as paying for a rental contract for a certain agreed duration.
To further gauge the AI model’s understanding of Polkadot, we asked how the parachain slot auction works:
Source: ChatGPT
The ‘crowd lending’ structure for purchasing DOT tokens involves ‘staking’ to help a project win an auction. This is, simply put, intriguing. Due to current US regulatory pressure on crypto staking, anything structured in a way that involves ‘staking’ could attract regulatory scrutiny.
For example, Coinbase recently received a Wells Notice from the SEC. One of the objects of the possible lawsuit is reportedly the crypto staking service.
So we asked ChatGPT what a crowd lending is and what its legal status is in the US. The explanation was appropriate, but the AI model could not say with certainty whether crowd lending is legal in the US.
Source: ChatGPT
Here is ChatGPT’s analysis of the legality of crowd lending in the US
Source: ChatGPT
At this point one thing is crystal clear. The development of Parachains could drive demand for DOT tokens, as project teams will 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 response:
Source: ChatGPT
We need to put a number on the aforementioned possible upward pressure on DOT’s value due to the added parachains. We have collected historical price data on DOT to help make future price predictions.
Some of ChatGPT’s results were inaccurate, with a large deviation from the price data collected by TradingView.
For example, ChatGPT stated that DOT reached a high of $52 in December 2021. On the contrary, TradingView data showed that it reached a high of $39 on December 1, 2021.
Source: ChatGPT
The AI model is not allowed to make price predictions, so we let it go jailbreak techniques to obtain modest price prediction values for DOT. We had to ask the AI model to break down DOT’s 2021 historical price data to use for the predictions.
Surprisingly, the results were different from the previous output.
Source: ChatGPT
The results showed that there was little deviation from the TradingView data, compared to the previous results. The jailbreak version has been known to give outright false information, but this particular case was somewhat different.
On the other hand, the classic version resorted to adding a direct link from CoinMarketCap to track historical price data.
Source: ChatGPT
However, it is worth noting that the AI model tracks various sites to collect data on cryptocurrency prices. These sites sometimes have different real-time price values for crypto assets and can explain the price deviation seen in the first and second outputs.
We then prompted ChatGPT to predict the price of DOT by the end of 2023 and 2024 based on the above historical price data.
Although ChatGPT only provides speculative answers, this time it yielded a total of $80-$100.
Source: ChatGPT
We extended ChatGPT to extrapolate the same data and provide a modest average value of DOT by the end of 2024. The AI bot expects the price of DOT to increase to $120-$150.
Source: ChatGPT
Not everyone has the patience to wait for long-term prospects. What does DOT’s short- and medium-term prospects look like? The daily chart could provide some clues.
Looking at the daily price charts of DOT
Source: DOT/USD, TradingView
At the time of writing, DOT was trading at $3.7387. Both are The Relative Strength Index (RSI) and the Money Flow Index (MFI) remained below the neutral line of 50. The statistics on the chart indicate a bearish price movement.
Read Polkadots [DOT] Price forecast 2023-2024
Conclusion
As an AI tool, ChatGPT is able to understand complex technical information. It has a good understanding of the Polkadot ecosystem and how the development of its parachains affects DOT’s price action.
Although ChatGPT predicted that the price of DOT could reach $120-$150 by 2024, only time will tell if it made the right prediction.