Polkadot’s digital token, DOT, has managed to close above the crucial resistance level of $8.60 on the weekly chart. This particular level has historically played a crucial role in determining the price direction of DOT.
Analysis by Rekt Capital indicates that DOT is currently retesting $8.60 as a support level, a move that could influence its upcoming trajectory.
A similar retest of this level in 2021 led to a substantial rally to new record highs above $50. Conversely, earlier in 2023, the failure to hold $8.60 as support resulted in a sharp decline to a yearly low of $4.15.
Looking at past trends and potential price targets
The $8.60 level has repeatedly proven to be a critical turning point for Polkadot. A successful retest at this level in 2021 triggered remarkable gains, pushing DOT to its all-time high.
Conversely, the unsuccessful retest earlier this year resulted in significant losses, underscoring the significance of this key zone.
If the retest proves successful, DOT could target the next major resistance level at $12.61. This represents a potential gain of 101.53% from its current position, based on historical price patterns.
However, if $8.60 fails to hold, traders might witness a retracement to lower levels, including the $4.15 support level.
Positive indicators in metrics and momentum
At the time of writing, Polkadot was trading at $8.86, showing a 4.40% increase in the past 24 hours and a 16.97% surge over the previous week.
The 24-hour trading volume stands at $1.03 billion, with a circulating supply of 1.5 billion DOT, resulting in a market capitalization of $13.48 billion.
Data from Coinglass reveals an 8.74% rise in Open Interest (OI) to $499.25 million, along with a 22.03% uptick in trading volume to $915.97 million.
Moreover, the OI-Weighted Funding Rate for DOT has remained positive since mid-November, indicating a strong demand for long positions.
Notable spikes in funding rates on November 12th and 18th signal heightened bullish sentiment, aligning with the recent breakout above $8.60.
Assessing on-chain activity and technical patterns
On-chain metrics demonstrate a mixed picture for Polkadot. DefiLlama data shows that the Total Value Locked (TVL) in Polkadot is currently at $55.89 million, with a 24-hour decrease of 27.44%.
The stablecoin market capitalization on the network amounts to $89.13 million. Despite the decline in TVL, the positive funding rates and rising open interest suggest that traders are preparing for further upside potential.
From a technical standpoint, Polkadot recently broke out from a bullish falling wedge pattern, typically indicating a forthcoming upward momentum. This breakout coincides with the move above $8.60, instilling optimism among traders.
Market participants are closely monitoring the monthly closing price, which could reinforce the breakout if it maintains above $8.60.