Polkadot Leads Rotation Into Older Layer‑1s as Fed Hike Odds Rise

Pre‑2020 layer‑1 tokens dominated Tuesday’s crypto market as Bitcoin and Ether slipped, while traders pushed the odds of a Federal Reserve rate hike higher.

Polkadot’s surge and stablecoin proposal

Polkadot jumped 16.7% to $1.25, marking a 42.5% weekly gain and the strongest weekly performance among the 50 largest tokens. The rally coincided with an on‑chain referendum (OpenGov Referendum 1944) to launch a native stablecoin, dotUSD. The proposal, submitted by the Polkadot Community Foundation, received 97.5% support in the voting period, allocating $2.5 million in USDT and $2.5 million in DOT to seed the stablecoin’s liquidity pool.

Other legacy layer‑1s rise

Cosmos Hub, Decred and Ethereum Classic each posted gains of over 8% without any recent governance or product announcements, moving in tandem with Polkadot during a week when Bitcoin rose 1.6%.

Broader market context

• Bitcoin closed at $78,539, down 0.83% on the day but up 1.6% weekly.
• Ether fell 0.29% to $2,484.83, up 2.8% weekly.
• Overall crypto market cap stood at $2.70 trillion with Bitcoin dominance at 58.36%.
• The Crypto Fear & Greed Index slipped to 69, remaining in “greed” territory.

Fed rate‑hike odds widen

Polymarket’s prediction market raised the probability of a 0.25‑point Fed rate increase to 54.5%, marking the third consecutive session of widening expectations ahead of the September 15‑16 FOMC meeting.

Notable moves in other assets

• VeChain gained 10.6% (19.5% weekly).
• Zcash rose 0.82% and 39.2% weekly after Grayscale announced options availability for its ZCSH ETF.
• Injective surged 5.25% (33.8% weekly) following listings on Kraken and Robinhood and a record staking milestone.
• Useless Coin jumped 24% after listings on two Korean exchanges.
• Venice Token led daily gainers with a 30.2% rise, reaching a record $25.49.

Commodities and equities

Brent crude closed at $99.31, its highest level since July 23, while U.S. equities fell, with the S&P 500 down 0.58% and the Nasdaq down 0.32%.