Connect with us


Polkadot: Before parking money in DOT for 2022, read this



Source: Unsplash

Let’s assume someone presents DOT’s daily price chart but only from mid-May to now. You would be mistaken to think that it is a stablecoin if you didn’t know better. This scenario highlights just how relatively inactive DOT has been for almost four weeks.

DOT’s price action highlights a lack of directional volume. In other words, it has been one of the least attractive cryptocurrencies to investors. This is despite the fact that it is one of the top cryptocurrencies and belongs to one of the fastest-growing blockchain networks.

DOT traded at $9.16 at press time with a little appreciation of 0.69% over the last day. Its weekly performance paints a bleaker picture given that it is down by 10.86% in the last seven days.

Source: TradingView

DOT’s indicators also highlight a similar picture. A lack of activity with the RSI hovering between the neutral level and the oversold since mid-May. The MFI barely shows any accumulation or distribution activity in the last few days.

Can on-chain metrics shed more light on DOT?

Things aren’t looking too good for DOT in the short-term based on on-chain metrics. Its market cap and supply held by whales dropped significantly in the last 24 hours.

The supply held by whales notably dropped lower than it fell during the May crash, suggesting that DOT whales are slashing their holdings. Things look similar in the derivatives market as shown by the Binance funding rate which also experienced a notable dip in the last 24 hours.

Source: Santiment

Will the crypto gods ever smile at DOT again?

Despite its underperformance, DOT still underpins one of the largest Web3 networks in the world. Polkadot’s para chain approach is ideal especially for enterprise blockchains looking for an easier way to build and roll out. DOT takes center stage as a necessary component for para chain auctions and other forms of utility. This should contribute to its long-term health.

Meanwhile, the short-term bearish performance is now pushing closer to a key structural support level just below $8. This is a healthy zone for which to look out for whale accumulation and perhaps a major bounce to the upside. The extended drop might thus provide an accumulation opportunity at lower price levels.

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.

Please select your Email Preferences.

Michael is a full-time journalist at AMBCrypto. He has 5 years of experience in finance and forex and more than two years as a writer in the crypto and blockchain segments. Michael's writing at AMBCrypto is primarily focused on cryptocurrency market news and technical analysis. His interests include motorcycles and exotic cars.

Click to comment

Leave a Reply

Your email address will not be published.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.