Over the past day, the cryptocurrency market has taken a bearish turn, with many digital assets experiencing price corrections, including Polkadot [DOT].
Polkadot, one of the top 20 cryptocurrencies by market capitalization, was hit hardest by this downturn. Consequently, CryptoCrypto conducted an investigation to assess the likelihood of DOT recovering in the near future.
Recent Price Correction of Polkadot
While several cryptocurrencies saw minor pullbacks, Polkadot saw its value plummet by almost 10% within the last 24 hours.
As of the latest data, the token was trading at $9.49, boasting a market capitalization exceeding $14.44 billion, positioning it as the 15th largest cryptocurrency by market cap.
What’s concerning is that DOT’s trading volume spiked by 15% in the last day, contributing to its price drop.
This downward price movement also impacted the token’s social metrics negatively, with Santiment’s data showing a sharp decline in DOT’s social dominance, indicating a waning interest in the token.
Additionally, Polkadot’s Weighted Sentiment entered negative territory, suggesting a growing bearish sentiment surrounding the token in the market.
Potential Recovery for Polkadot
Subsequently, CryptoCrypto delved into other datasets to identify any signs of a recovery from this bearish phase in the immediate future. It was discovered that as DOT’s price began to decline, investors started liquidating their holdings.
Hyblock Capital’s data revealed multiple spikes in DOT’s sell volume in the past 24 hours, with one instance reaching a peak of 100, signaling heightened selling activity in the market for the token.
Moreover, Coinglass data indicated a slight decrease in Polkadot’s Funding Rate. Falling Funding Rates in cryptocurrencies typically signify an increasing prevalence of short positions, hinting at a bearish market sentiment.
Similarly, the Relative Strength Index (RSI) echoed these sentiments by displaying a sharp drop, indicating a rise in selling pressure.
In the event of a prolonged downtrend, DOT may initially test its 20-day SMA support level, as suggested by the Bollinger Bands. This juncture could potentially mark a turnaround point for Polkadot to initiate a bullish rally and recover.
Interestingly, not only did Polkadot’s price decline, but its network activity also mirrored a similar pattern.
Artemis’ data reviewed by CryptoCrypto indicated a notable decline in both DOT’s daily active addresses and transactions over the recent days, signifying reduced blockchain utilization by users that could pose further challenges for DOT.