Over the past five months, Polkadot [DOT] has been on a continuous decline. Despite several bullish signals suggesting a potential uptrend, the price has continued to plummet.
At the current moment, DOT is trading at $4.14, representing a decrease of approximately 27% from its peak in August. The cryptocurrency commenced the week with optimistic expectations following a bullish RSI divergence observed in recent weeks.
While it might be premature to draw conclusions regarding the recent uptick in DOT’s price, the cryptocurrency seems to be encountering similar challenges this week. The demand for DOT remains subdued, hindering its recovery.
Challenges Hindering DOT’s Bullish Progress
Unlike many top-performing cryptocurrencies that have aligned with prevailing market narratives, the Polkadot network has failed to leverage this trend, resulting in a redirection of liquidity elsewhere.
This divergence aligns with Polkadot’s diminishing dominance in the market. Notably, the network exhibited a surge in dominance between October and December of the previous year.
During this period, there was a notable uptrend in prices. Subsequently, Polkadot’s dominance dropped from 0.63% to 0.%.
Prior to making a recovery attempt, Polkadot’s dominance hit a low of 0.27% towards the end of August. This decline mirrors the downward trajectory witnessed in DOT’s value and the network’s overall performance.
The decreasing liquidity levels and the failure to tap into prevailing market narratives have also impacted the on-chain volumes significantly.
In March of this year, Polkadot recorded its highest 12-month on-chain volume, totaling $988.1 million.
In contrast, the daily real volume of Polkadot in recent days has been stagnant, staying below the $50 million mark. This indicates a significant slowdown in the network’s utility over the past few months, subsequently affecting DOT’s performance.
Prospects for Polkadot and DOT Redemption
Despite the prevailing challenges, there are positive developments. The Polkadot ecosystem has showcased consistent activity throughout the year, with the network reporting a doubling in the number of fee-paying transactions on Polkadot rollups within the last 12 months.
Considering that DOT is nearing its lowest point since October 2023, there could be an opportunity for a rebound given the historical demand resurgence at these levels, leading to a notable rally in March.
Investors may view this as a chance to enter the market at discounted rates.