Is Polkadot set to rally past $5.5 after the last bounce
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- The retest of the 50% retracement level saw a strong bullish reaction.
- Steady demand behind DOT in the past two weeks encouraged bullish sentiment.
Polkadot [DOT] saw some interesting developments over the past week. The Cosmos [ATOM] network announced on 29 June that Polkadot was the latest to join its Interchain. This can offer growth opportunities when enterprise blockchains go mainstream.
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Polkadot’s NFT volume witnessed a massive rise in the middle of June. But the network struggled to compete in terms of active users. On the price charts, DOT followed Bitcoin’s [BTC] bullish path for the past two weeks.
Should Polkadot traders wait for capital rotation into Bitcoin by whales?The Bitcoin Dominance metric trended upward from 6 June to 29 June. Over the past two days, it saw a small dip. Meanwhile, the altcoin market cap continued to rise over the past 48 hours. This could be a bullish sign for altcoins as a whole.
Polkadot could stand to benefit from this development. It showed a bullish market structure after the breach of the $5.04 level that marked a lower high during its retracement. What was more, the Fibonacci retracement levels plotted based on DOT’s previous market structure break showed that the 50% level lay at $4.81.
This level has been tested as support, and DOT has appreciated close to 10% since then. The OBV was also in a strong uptrend. The RSI showed considerable bullish momentum on the H4 timeframe with a reading of 61.
Therefore, if this momentum continues, DOT is likely to reach $5.785, the 61.8% Fib extension. However, if the altcoin market continued to note an increased capital inflow, DOT can push toward $7, the next higher timeframe resistance level.
The Open Interest chart saw muted bullish sentiment from speculatorsThe spot CVD has climbed higher over the past two days but saw a downtrend persist over the past week. This showed that the shorter timeframes did not see consistent demand, but did not suggest DOT prices can’t climb higher. However, the Open Interest was not as enthusiastic in support of the buyers.
Realistic or not, here’s DOT’s market cap in BTC‘s terms
The OI ebbed and fell with price fluctuations over the past week, but was flat overall. This suggested little capital inflow to the market and a lack of conviction from bullish futures market participants.
This could change over the coming days and is worth watching, especially for short-term DOT traders.