Polkadot Plummets 16% Amid $87M Spending Criticism, Bulls Eye Reversal

The global cryptocurrency market has been facing great difficulties recently, with Bitcoin trading at $60,000. Amidst this, Polkadot (DOT) has suffered a significant drop, with its value dropping by 16% in the past month. It is currently trading at $5.80, down 6.58%, indicating a continued downward trend. However, technical analysis indicates that DOT may be on the verge of a bullish reversal.

Polkadot appears poised for a significant breakout as indicated by the descending wedge pattern on the daily chart. This bullish reversal pattern is characterized by converging trend lines sloping downwards. Current price action is revealing descending support and resistance levels that form this wedge, signaling a potential shift in market sentiment. Historically, breakouts from descending wedges have led to significant price rallies.

Jonathan Carter, prominent market analyst highlight Polkadot’s key resistance level is at $6.50. A breakout of this resistance would signal a change in market sentiment and could lead to significant upward momentum. This important level acts as a psychological barrier, a breach of which could attract further buying interest and drive the price higher.

Jonathan’s analysis supports this bullish outlook and identifies profit targets at $7.75 and $9.00. These levels represent key resistance zones where traders may consider taking profits. The $7.75 level coincides with a previous price consolidation area and acts as intermediate resistance before Polkadot aims for a higher target of $9. The $9 level marks a significant resistance zone, increasing the possibility of making substantial profits from current price levels.

Additionally, the volume profile indicates increased trading activity which often precedes a breakout. Also, the Relative Strength Index (RSI) is currently hovering around 48.65, suggesting that DOT is neither overbought nor oversold. This neutral RSI level provides room for further gains in upside momentum.

Criticism of Polkadot’s high spending

However, Polkadot has faced criticism for spending a huge amount of $87 million in early 2024, reducing its balance to $245 million, of which $188 million is in liquid assets: $36.7 million for advertising and events, $15 million for trading platform incentives, and $23 million for development. Despite these investments, however, Polkadot lags behind Ethereum and Solana in network activity, developer engagement, adoption rate, revenue, and total locked value.

Some community members speculate that the backlash could lead to a correction in DOT’s value in the coming days. Concerns over financial decisions highlight the network’s challenges in growing awareness and adoption in a competitive market. Continued community monitoring highlights the need for more strategic spending to drive tangible growth and development.

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