Polkadot [DOT] is currently trading at $4.25, registering a nearly 2% increase in value over the last 24 hours. The cryptocurrency has been encountering strong obstacles above its current price, with multiple attempts to break out thwarted due to insufficient buyer backing.
Nevertheless, there is a growing interest in Polkadot now. Data from CoinMarketCap reveals that DOT’s trading volumes surged by more than 20% within the past day.
In addition to the rising trading volumes, various indicators are suggesting a potential reversal in the trend.
Factors Driving DOT’s Ability to Overcome Resistance
Bullish investors are gearing up to assist Polkadot in breaking through the $4.27 resistance barrier. This particular price level has posed a significant challenge for approximately two weeks, signaling a lack of enthusiasm among buyers.
The Relative Strength Index (RSI) indicates a shifting momentum, currently standing at 50 and suggesting a transition in market sentiment from negative to neutral.
The increasing RSI has also crossed above the signal line, hinting at an impending bullish trend.
Polkadot has come into contact with the 50-day Simple Moving Average (SMA) at $4.28. A move above this level would likely shift the short-term sentiment to a bullish outlook, potentially propelling the price towards testing the next resistance at $4.64.
Analysis of Derivatives Data
Data from Coinglass reveals that derivatives traders are actively entering and maintaining positions in DOT. Trading volumes have surged by over 60%, while Open Interest has increased by approximately 2% to $223 million.
The Long/Short Ratio currently sits at a neutral level of 0.97, indicating a lack of strong bias towards either long or short traders.
However, an analysis on Binance suggests a notable dominance of long traders over short traders, with a Long/Short Ratio of 4.37.
Polkadot Network Activity Insights
One of the potential factors impeding Polkadot’s breakthrough above resistance could be the decline in network activity.
Recent data from Token Terminal highlights a noticeable decrease in the number of daily active addresses, signifying a drop in usage.
Since the beginning of the month, daily active addresses have plummeted from 5,200 to around 3,600. Conversely, daily transaction counts have remained relatively steady without significant fluctuations.
A reduction in network usage typically leads to decreased demand for a token and may reflect a diminishing confidence in Polkadot, further dampening market sentiment.
Market Prophit data suggests that sentiment surrounding Polkadot has predominantly been negative over the past month. Without a shift in this sentiment, DOT is likely to continue experiencing subdued performance.