- DOT’s price action pulled back after its previous uptrend failed to drum up enough liquidity
- Level of demand or sell pressure could be key, especially as market excitement grows
It’s possible that Polkadot‘s native token, DOT, could experience an upward trend due to renewed market enthusiasm. Yet, it’s worth noting that a recent effort to break out significantly from its wedge formation did not go as planned for the altcoin.
For the past seven weeks, the price action of DOT has been confined to a specific pattern, which resembles a wedge. This is because it has shown resilience at around $6 (a level providing support), yet its upward progression has been limited by a falling resistance line, indicating an overall bearish trend since December.
Last week, DOT managed a midweek break free from the downward resistance trend it had been following, sparking optimism about potential further gains in the near future. However, this upward momentum was brief as the price dipped by approximately 12% over the last two days, bringing it down to its current price of $6.61.
The weekend pullback underlined the lack of strong enough demand to support a significant upside.
Over the past two days, there’s been a noticeable resurgence of enthusiasm in certain altcoins, accompanied by favorable liquidity movements.
Is DOT ready for another attempt?
The reduced price at DOT offered a chance for buyers to approach the support level more closely.
As a cryptocurrency investor, I’ve noticed a significant dip in trading and investing activity lately, with the number of active addresses dropping to 5,154 on January 11th – the lowest it’s been in the past three months. However, I believe this downturn might signal a strong comeback, fueled by renewed enthusiasm among traders and investors.
source: Polkadot.subscan.io
On January 17th, active accounts resurged to a recent peak of 8,038 active wallets. Additionally, the number of new wallets has significantly increased over the past two days, rising from 1,459 to 2,069. This increase suggests that a substantial number of holders were expecting a rebound within the support range.
The increased number of transactions at various addresses led to a rise in DOT’s Open Interest, which climbed from $439.02 million on January 14th to $524.36 million by January 18th. At the moment, though, the Open Interest has decreased back to approximately $475 million.
As reported by Coinglass, there was an outflow of more than $10 million in DOT over the past two days. This trend appears to align with the decreasing Open Interest for this altcoin and its downward price movement.
source: Coinglass
As a researcher, I’ve noticed an increase in spot flows, which suggests that traders at DOT are still prioritizing immediate profit-taking opportunities. Interestingly, over the last two days, data on liquidation reveals that approximately $3 million worth of long positions were closed out or liquidated.
It was found through these liquidations that a modest amount of resources were dedicated towards highly-leveraged long trades. While this could potentially stimulate accumulation, the current data indicates that DOT isn’t getting much focus or interest at the moment.
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2025-01-20 07:03