What happened with Dash?

Over the past two weeks, the price of Dash has skyrocketed, its value has gone up by more than 100 percent.

The rise has started at around the $20 to $22 mark and reached as high as $57.89 on March 2. As of the time of writing, the value has retraced somewhat but is still at a very high mark of about $52.

This incredible surge has taken Dash higher on the list of all cryptocurrencies by their market capitalization, displacing the previous favorites Ripple and Litecoin. Right now, Dash is the third most popular cryptocurrency, right after the undisputed leaders - Bitcoin and Ethereum.

The sharp increase is unprecedented in Dash’s history and the cryptocurrency community is now trying to discover and analyze why it happened.

In addition, the average daily trading volume of Dash is now similar to that of Ethereum, the second-most-popular cryptocurrency after Bitcoin: $25 mln vs. $29 mln respectively. The altcoins have similar trading volumes despite a wide discrepancy between their capitalizations: $1.6 bln for Ethereum and $376 mln for Dash.

price change of dash??
What are the reasons for the surge in Dash price?
The surge is likely to have been caused by a combination of factors, such as development news about Dash and speculative activity.

For one, there has been major news impacting the user value of Dash: the coin has partnered with a digital payments service BlockPay, in order to enable point-of-sales payments of Dash. This can potentially result in a significant boost to Dash’s usability, as direct payments in brick and mortar shops are a rare option for any cryptocurrency, even Bitcoin. However, that news alone could not make Dash the third most popular coin.

One more possible reason for the sudden spike is thought to be speculative activity. Poloniex, an online cryptocurrency exchange, is a place with the largest amount of Dash trading volume, by far. Poloniex also offers margin trading option. It means that a person allows a trader to use their assets to make deals in exchange for a percentage commission.

This environment has resulted in large amounts of ‘shorting,’ which is a controversial practice of selling borrowed assets, in this case, Dash with an expectation of a decrease in value. After the supposed price drop, the traders then buy the assets back at a lower value, return it to the lender and pocket the difference.

However, if in reality the price instead increases, it may result in a situation known as ‘short squeeze.’ When a shorting trader sees a slight increase in price, they may decide to buy back at a loss, in order to prevent the possibility of even larger losses, in case the price keeps growing. That creates a positive feedback loop, whereby a growing price provokes shorters into selling, and them selling drives the price even further up. This is seemingly what happened with Dash.

So, ultimately, the price spike has been caused by the combination of positive news about the cryptocurrency