There is renewed speculation in the market that Polkadot’s native cryptocurrency, DOT, could be gearing up for a potential bullish surge. Nevertheless, the altcoin recently experienced a failed breakout from a significant wedge pattern.
For the past few weeks, DOT has been caught in a downward trend, with $6 acting as a crucial support level. On the flip side, its upward movement has been hindered by a descending resistance line, outlining the wedge pattern that DOT has been trading within for the last seven weeks.
Although DOT managed to break out of this descending resistance line last week, the excitement was short-lived as the price retraced by approximately 12% in the following two days, settling at $6.61 at the time of writing.
The weekend pullback emphasized the lack of robust demand necessary to drive a substantial upward movement.
Interestingly, the market dynamics in the past 48 hours have shown a resurgence of interest in certain altcoins, with positive liquidity inflows being observed.
Is DOT Poised for a Renewed Breakout Attempt?
The dip in DOT’s price also provided an entry opportunity for buyers near the support level.
A potential resurgence is likely to be fueled by growing interest among both traders and investors. Recent data indicated a decline in address activity to 5,154 addresses on January 11 – the lowest in the last three months.
The number of active accounts surged to 8,038 active addresses on January 17, and new addresses spiked from 1,459 to 2,069 in the last two days. This surge suggested that a considerable number of holders were anticipating a rebound from the support range.
The uptick in address activity was mirrored in DOT’s Open Interest, which rose from $439.02 million on January 14 to $524.36 million on January 18, albeit dropping to $475 million at the current time.
According to Coinglass, DOT witnessed spot outflows exceeding $10 million in the last two days, aligning with the altcoin’s declining Open Interest and price action.
The rise in spot flows suggested that DOT traders were primarily focused on short-term profit gains. Notably, liquidation data revealed liquidations of slightly under $3 million in long positions over the last two days.
These liquidations indicated that a relatively small amount of capital was tied to leveraged long positions, potentially paving the way for accumulation. However, the current data implied that DOT was not attracting significant attention.