Why is the Polkadot Price dropping?
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Polkadot (DOT), recognized for its innovation in the crypto space, is facing challenges as its price has fallen from a high of $11.80 in March to its current level, marking a 50% drop. Despite a recent protocol upgrade intended to improve its functionality and scalability, technical analysis suggests that DOT’s price could decline by an additional 13% soon.
Polkadot’s Price Under Pressure
Polkadot (DOT), the leading Layer-0 blockchain, is facing a drop in demand this July, with activity on its Relay Chain and parachains expected to hit their lowest levels this year. This decrease is causing DOT’s price to hover in a narrow range, showing signs of increasing selling pressure.
Despite the price drop, which has seen DOT fall by 2.8% in the last 24 hours to around $5.68, the network’s on-chain activity remains strong. The daily holder count is at an all-time high of 1.3 million, with 321 new users added recently.
Meanwhile, the daily active users have also increased by 19.21%, and on-chain volume has reached a record high, according to Polkadot Subscan.
Furthermore, data from Coinalyze shows that open interest is relatively low, with only a slight increase of 0.12% in the past day. Nevertheless, the Long/Short ratio stands at 2.83, meaning that 73.86% of traders are optimistic and betting on a price increase. This indicates that while the market is currently cautious, there is still a potential for a rebound in the future.
Polkadot’s (DOT) price has recently dropped, but some positive indicators are still present. According to Polkadot Subscan, the number of daily holders has reached a record high of 1.3 million, with 321 new holders added in the last 24 hours.
In addition to this, daily active users have grown by 19.21%, and on-chain activity has reached an all-time high. This indicates that the Polkadot network continues to be active and popular among its users.
CoinGecko notes a 23% increase in DOT trading volume over the past 24 hours. However, it’s important to note that trading volume has been declining since July 5, when DOT reached its yearly low. This decline suggests that while there is some trading activity, buying interest is not as strong, and bullish sentiment remains subdued.
Furthermore, data from Coinalyze shows that open interest is relatively low, with only a slight increase of 0.12% in the past day. Nevertheless, the Long/Short ratio stands at 2.83, meaning that 73.86% of traders are optimistic and betting on a price increase. This indicates that while the market is currently cautious, there is still a potential for a rebound in the future.
Polkadot’s price seems to be struggling despite very positive on-chain metrics. However, investors remain confident in DOT’s long-term prospects for a rally.
Following the recent break below the crucial $6 support region, Polkadot’s price has triggered a significant long-squeeze event, liquidating a notable number of long positions. This development is crucial for understanding potential future movements in the market.
The accompanying chart illustrates the potential liquidation levels in Polkadot’s price action, providing insights into where smart money might focus in the mid-term. Currently, there is a significant amount of liquidity resting near the $6 mark, likely comprising buy-stop orders from aggressive short positions initiated near this critical threshold.
In the event of a bullish correction, the $6 mark will be a primary target for buyers aiming to capitalize on liquidity and potentially complete a pullback to the previously broken support level.
