Kusama recently finalized its latest parachain auctions in which there were six slots available and there was a lot of competition just as has been the case with previous auctions. The event had a major impact on KSM’s price action just as expected, and might continue having a significant impact in the next few months.

KSM experienced significant demand during the parachain auction week. Its price traded as low as $276 just two weeks ago and as high as $451 during yesterday’s trading session courtesy of the robust demand during the parachain auction week. However, news about some of the auction winners has also had a positive impact on the price action. For example, it was recently revealed that a crypto project called Kilt won the 6^th parachain auction with more than 8,000 stakeholders.

Moonriver was another winner that performed exceptionally well within its first two weeks of launch, during which its market cap grew to $500 million. The announcement about the success of the project that won the parachain auctions has had a positive impact on KSM’s price action. For instance, its price dropped to $355 on Friday before pumping back up and achieving yesterday’s high. This impressive price action is linked to the renewed interest in the token after the winners were announced.

KSM has so far experienced a significant pullback in the last 24 hours during which it dropped by 6.33% and is currently trading at $403. However, its weekly stats indicate that it is still up by 4.43% but holders are experiencing uncertainty about its price action now that the parachain auctions are over and also because the market is currently experiencing a wave of bearishness.

Source: Binance

Selling pressure increased significantly in the last 24 hours as some traders took profit but it has so far managed to overcome most of the bearish pressure that is currently plaguing most of the top cryptocurrencies such as Bitcoin. This is because the parachain auction’s impact on KSM’s price action remains strong.

Here’s why KSM has performed well in the last few days

The performance of the parachain auction winners is often considered a good measure of demand for KSM and this seems to be the case with the latest winners. For example, Moonriver’s impressive price action may have induced positive sentiments for KSM. Note that the projects that run on Kusama and Polkadot parachains pay for their slots using KSM, thus contributing to demand for the native token.

The token’s demand is also affected by other factors such as the lockup period involved for the winning projects. The parachain auction mechanism allows the projects to lock up KSM tokens used to secure their win in the parachain auctions for around 48 weeks. The locked-up tokens cannot be sold during that time regardless of whether the price goes up or down, reducing the supply of tokens that can be used to move prices. This approach can potentially contribute to favorable price action for KSM in the next few weeks.

KSM will likely test new all-time highs between now and March when the locked-up tokens are released. Meanwhile, the more projects running on Kusama, the more the demand for KSM, thus impacting its price action.