The recent weekly surge of 21.81% in Polkadot’s [DOT] value might lose momentum in the near future, given the current downward trajectory. As of the latest update, DOT has dipped by 1.81%, signaling a possible further decline for the cryptocurrency.
Insights from CryptoCrypto’s latest analysis have pinpointed the next crucial level for DOT, showcasing a potential bounce-back zone.
Growing Bearish Momentum as Traders Bet on DOT’s Downtrend
Market sentiment hints at an impending extended decline for DOT from the prevailing price points.
Spot traders appear to have kickstarted a downtrend by shifting their DOT holdings from personal wallets to exchanges for selling purposes. Recent data indicates Exchange Netflows of $125.72 million worth of DOT inflows into exchanges, indicating a strong inclination towards selling pressure.
In line with the bearish stance, a substantial number of long positions have been liquidated within the market. Over the past 24 hours, long positions worth $1.21 million were closed out, indicating significant losses for traders who had expected an upward trend.
In contrast, short position closures only amount to $151,000, presenting a stark market imbalance that favors the bears significantly.
Projected Decline of DOT – Identifying Potential Support Levels
As per insights from CryptoCrypto’s technical analysis, DOT’s next probable support level is discernible on the charts. The current price trends hint at a possible drop towards $4.484, a level where essential support may be found, paving the way for an upward push. If there’s a surge in buying interest at this point, DOT could potentially rally by 73.39%, achieving a target of $7.75.
In the event of this support level faltering, DOT could witness further decline towards a lower support area at $3.940, where adequate liquidity could drive prices upwards. However, consolidation at this level might be necessary, as seen in previous instances.
Potential DOT Retracement Indicated by Liquidity Outflows
Both the Money Flow Index (MFI) and Chaikin Money Flow (CMF) indicators for DOT point towards a downtrend.
Despite showing positive readings, these technical indicators rely on volume and price to assess market sentiment, remaining optimistic despite the ongoing decline. Presently, the MFI stands at 56.99, with the CMF signaling 0.20 – both indicative of positive territory.
While the MFI and CMF maintain positive positions, their decreasing values suggest a temporary retraction rather than a full trend reversal. Therefore, despite the promising price behavior, DOT’s current decline may only be a short-lived setback before a resurgence in an upward direction.