The Polkadot price action has been eerily similar to that of other cryptocurrencies like Bitcoin, Ethereum, and Ripple. DOT crashed to a multi-month low of $6.96 and then formed a hammer pattern. It is now trading at $9.90, which is slightly below this week’s high of $11.71. The coin’s market cap has dropped to about $11.2 billion.
Polkadot is one of the top blockchains in the world. The platform introduced the concepts of parachains and relay chains. Its goal is to help developers build parachains that act as independent blockchains. Examples of some of the leading parachains are Acala and Moonbeam. To connect to the relay chain, parachain can pay as they go or lease a slot for some time. Polkadot also uses other technologies like bridges, fishermen, and collators.
The Polkadot price has been in a strong downward trend in the past few months as investors have worried about rising interest rates and the slow growth of its ecosystem. A closer look at its top parachains shows that they have a tiny ecosystem. The situation worsened after the crash of Terra, with many investors worried that they could lose their investments.
Polkadot price prediction
This month has been important for the Polkadot price action. As shown below, the coin managed to drop below the support at $14.25, where it had struggled moving below before. After making this breakdown, the coin formed a hammer pattern during its crash last week. It now remains below the short and long-term moving averages while the RSI has moved slightly above the oversold level.
Therefore, the outlook for the DOT price is still bearish as risks in the market keeps rising. If this happens, the next key level to watch will be last week’s low at $6.97. On the flip side, a move above the resistance at $12 will invalidate the bearish outlook.