The Polkadot price has bounced back from its lowest level in July. The coin is trading at $14.28, which is about 40% above last week’s low. This rebound brings its total market capitalization to more than $13.85 billion, making it the 9th biggest coin in the world. It is sandwiched between Dogecoin and Uniswap.
What happened? The DOT price has jumped mostly because of the strong performance of Bitcoin. After retreating on Tuesday, Bitcoin rose above $40,000 on Wednesday. This performance is mostly because investors expect that the Federal Reserve will sound dovish when it concludes its meeting today. This is evidenced by the fact that bond yields have declined to the lowest level this year.
Polkadot is also rising after the latest round of parachain auctions ended. As we wrote on Tuesday, the five winners of the parachain auctions were Karura, Moonriver, Shiden, Khala, and Bifrost Finance. This is notable because parachains are an integral part of the success story of Polkadot’s network.
The Polkadot price is also doing well because of the strong performance of projects built using the network. For example, Chainlink, Kusama, Ontology, and Ankr have all jumped significantly recently.
Why it matters. The Fed decision matters to cryptocurrencies because its tone could have an impact on risky assets. A hawkish Fed is usually bearish for cryptocurrencies while a dovish Fed has been cited as the main reason why the price surged amid the pandemic.
The daily chart shows that the Polkadot price has made a strong recovery in the past few days. That has seen it move above the 78.6% Fibonacci retracement level. Still, the coin remains substantially below the 50-day and 100-day moving averages, which is a bearish sign.
It is also between the descending channel that is shown in black. Therefore, in my view, I suspect that it is too early for bulls to cheer this recovery. This is because I expect that the coin will maintain the bearish trend so long as it is below the two moving averages.
Follow Crispus on Twitter.
