Polkadot has seen a significant price drop over the past few days, but it has found much-needed support around the $6 mark. The price is currently at $6.54.
DOT has failed to make any gains during the ongoing week and has remained below the crucial $7 mark, with price movements remaining relatively subdued.
Polkadot (DOT) Locked Within Decisive Range
The past few days have seen DOT stem its fall to a certain extent, with the daily chart showing subdued price movement and sideways consolidation. DOT registered a significant drop towards the end of the previous week, which saw the price drop below the 200-day SMA, going as low as $5.72 on Saturday. Sunday saw a recovery of sorts, but the price was unable to move past the 200-day SMA and settled at $6.87 after finding support at the crucial $6 mark.
Monday saw DOT rise to a high of $7.21 before sellers took control and pushed the price back below the 200-day SMA to $6.70, while Tuesday saw DOT close at $6.71 after recovering from a low of $6.37. With strong support at $6, bears have found it difficult to push DOT below $6, indicating that the price could recover. DOT remained in the red on Wednesday as well, registering a drop of 1.79%. The current session sees DOT down by just over 1%, with the price currently at $6.53.
DOT’s downward trajectory aligns with the rest of the cryptocurrency markets, with Bitcoin and Ethereum also in the red. Bitcoin has been down by nearly 4% over the past 24 hours, while ETH has been down by over 3.50%. The bearish sentiment gripping the markets has seen DOT drop by nearly 25% over the past 7 days.
Could We See A Price Breakout?
As mentioned earlier, DOT is sandwiched between $6, where it has found strong support, and the 200-day SMA at the $7 mark, where it faces considerable resistance. Should bearish momentum persist, we could see DOT drop to its support level of $6. A continuation of this momentum could see the price drop below $6, making its way toward $5.50 or $5. However, should bullish sentiment return, DOT could see a reversal and test the resistance at $7. Should it be able to move past the 200-day SMA, we could see significant upward momentum that could target the crucial $10 price level if it is able to get past the 20 and 50-day SMAs at $8 and $9, respectively.
Currently, most indicators, including the MACD and the Relative Strength Index (RSI), are bearish, indicating that DOT could stay in the red for the time being. However, staying above the support at $6 is crucial for the cryptocurrency to see a recovery in the short term.
During recent price movements, the perpetual futures market has had a considerable impact on the price of crypto. Looking at the futures market could help us understand Polkadot’s upcoming price dynamics. One way of doing this is to analyze Polkadot’s Open Interest chart. This chart looks at the number of open perpetual futures contracts across exchanges. Higher Open Interest means increased volatility, while a lower Open Interest means less volatility.
Looking at the chart above, we can see a substantial drop in the Open Interest and the price of DOT. This coincides with recent geopolitical tensions in the Middle East, which have put significant downward pressure on the crypto market. Currently, the market is in the middle of a cooling-off period. However, a renewed influx of long and short positions in the futures markets could lead to a surge in activity and volatility.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
