- Polkadot (DOT) has seen a consistent drop that has seen it slip below the $6 support in the past month.
- Polkadot relies on Bitcoin to reboot its price, amid growing ecosystem utilities.
DOT, the native digital asset of Polkadot blockchain is currently down 25% in June, as the price drops below key support levels. Polkadot’s struggle raises concerns about potential further declines in its price action.
Assessing Polkadot’s Bearish Selling Pressure
DOT’s price reached the $5.46 support level on Monday, following Bitcoin’s drop to $64,700. Even though there was a little uptick, the general sentiment is still negative.
According to the latest MarketCap data, DOT is trading at $5.96, demonstrating a slight increase of 0.88% in the past day. The trading volume is still showing a pessimistic outlook, with a 6.7% decrease to $265 million.
A breakdown below the $6.23 support level on June 17 proved important, triggering a 12% price drop in two days. This level now acts as a key resistance, with the Ichimoku Cloud further emphasizing the bearish sentiment. Both the daily and 4-hour charts depict a price action below the cloud, indicating a short-term downward momentum.
Now that the current support level at $5.46 has crumbled, the next major resistance to watch is at $6.81. This level could spark a potential reversal of the downtrend. Further resistance lies at $7.12 and $7.41, which need to be surmounted for a confirmed bullish resurgence.
The moving averages add weight to the bearish outlook. DOT is trading well below the 200-day EMA, indicating a long-term bearish trend. Additionally, the 100-day EMA acts as a resistance level, hindering any major upward momentum.
Another key metric, the Relative Strength Index (RSI) reinforces this bearish narrative. Currently hovering around 30, it indicates rising selling pressure. A dip below this level could spur more declines, while a bounce might offer temporary relief.
Open Interest (OI) and funding rates, which offer valuable insights into market sentiment were also analyzed for DOT. While OI has declined, suggesting reduced speculative activity, the funding rate provides a mixed view. Recent fluctuations between positive and negative territory indicate a shift in sentiment.
Earlier positive funding rates which reflect bullishness, turned negative around June 8th, hinting at increased short positions or a decline in long holdings.
Bitcoin’s Influence on DOT’s Price
Bitcoin’s price remains a key factor influencing Polkadot. While Bitcoin’s current correction appears minor, a sustained drop below $60,000 could intensify Polkadot’s woes. If this eventually happens, DOT could see its price fall below $4.88. Conversely, a Bitcoin rebound to $67,000 could provide a much-needed breakthrough for Polkadot, potentially driving the price back up to $6.23 and beyond.
Another key factor that could contribute to DOT’s ascending price movement is Polkadot’s contribution to network development. As Crypto News Flash earlier indicated, Polkadot unveiled the launch of its Multisig solution to offer financial workflow management for enterprise users.
Another bold move made by Polkadot is on tokenization. As previously reported by Crypto News Flash, the network is set to change the game for physical assets. This move could unlock more potential for Polkadot and propel DOT to higher prices following increased adoption.
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