Polkadot Eyes Retracement after Bears Witness Recent Price Slump
Polkadot price has taken a dive below a major trend line, indicating a potential bearish phase. The $18 DOT price retests the broken level and may face stiff resistance. Polkadot’s stock has fallen after reaching an all-time high of $54.98 in November 2021.
Polkadot is Trading Low
According to CoinMarketCap statistics, the 12th largest cryptocurrency globally is currently trading at $18.24, representing a 67 percent drop from the crypto’s all-time high. Meanwhile, the global crypto market capitalisation is $1.91T, a 2.02% increase since yesterday.
The Polkadot ecosystem performed poorly in 2021. It lost 244% of its value during the year, significantly lower than Ethereum’s 416% gain. Due to the launch of its mainnet and parachain auctions, the platform took a long time to get fully operational. These events are the first steps toward launching applications and using cases on the platform.
Since the beginning of the year, the price of DOT has fallen to $17.31 from $28.58 at the end of last year. It has a negative return of almost 40%. Professional traders are hence, finding the Polkadot pricing to be unfavorable. The digital asset produced the greatest bearish engulfing candle this month, closing below the important WXY trend line from March.
Polkadot price volume is trending down, favoring bears, which should worry investors. The sharp decrease in digital assets indicates that the bears have firm control of the trend. Traders should search for entry points on smaller time frames to join the bears, considering that the decline may take longer to complete.
The swing low at $19.45 is the most secure invalidation to utilize. If the bulls establish a closing candle above the invalidation level, the bearish scenario will be null and worthless. Following that, the bulls might push the price back between $20 and $22, resulting in a 20% rise over the current Polkadot price.
Polkadot-Based Parachains Growing
In March, several projects in the Polkadot blockchain platform saw their prices increase due to the increased number of users. The company plans to launch around 80 parachains.
One of the first major blockchain networks to launch was the Acala network. According to a report, it has partnered with other projects and venture funds to create a $250 million “aUSD” Ecosystem Fund worth around $250 million.
Another two of the main Polkadot parachains are Moonbeam and Astar. These are focused on bringing multi-chain compatibility to the Ethereum network. Moonbeam is a blockchain smart contract that aims to help developers use tools related to the platform.
Moonbeam has the ability to allow users to transfer funds and claim rewards. It makes it a truly decentralized finance app. Daily Hodl magazine calls it one of the first fully operational parachains on Polkadot.
Where Polkadot (DOT) is Headed for Now
Unlike other smart contracts in the ecosystem, Polkadot’s parachain transactions don’t compete against each other. They have room for up to 100 parachains, which can be allocated through auctions.
The bottom has already been reached for the project. As it releases new parachains, they will bring utility and attention to the blockchain’s layer 1. The price of the Polkadot token will eventually recover as its parachain and base layer works together to build its value.
It makes sense for investors to consider investing in DOT since it’s one of the few blockchains built with a layer zero platform. Other cryptocurrencies can also build their use cases on top of it, similar to Ethereum and Cardano.
Despite the current situation, the value of DOT could eventually recover. As parachains become more popular and useful, the cryptocurrency’s price could rise.
