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July 5, 2024 by Kashif Saleem
The global cryptocurrency market faced significant challenges recently, with Bitcoin trading at $60,000. Amid this, Polkadot (DOT) saw a significant downturn, with its value dropping by 16% in the past month. Currently, it is down 6.58%, trading at $5.80, reflecting a continued a downward trend. However, technical analysis indicates a potential bullish reversal for DOT.
Polkadot appears poised for a crucial breakout, as indicated by a falling wedge pattern on its daily chart. This bullish reversal pattern is characterized by converging trendlines that slope downward. The current price action reveals descending support and resistance lines forming this wedge, signaling a potential shift in market sentiment. Historically, breakouts from falling wedges have led to significant upward price movements.
Prominent market analyst Jonathan Carter highlights Polkadot’s critical resistance level at $6.50. Breaking through this resistance could signal a change in market sentiment, possibly paving the way for substantial upward momentum. This key level acts as a psychological barrier; its breach would likely attract additional buying interest, propelling the price upwards.
Jonathan’s analysis supports this bullish outlook, identifying profit targets at $7.75 and $9.00. These levels represent significant resistance zones where traders might consider taking profits. The $7.75 level aligns with a previous area of price consolidation, serving as an intermediate resistance before Polkadot can aim for the higher target of $9. The $9 level marks a substantial resistance zone, reinforcing the potential for considerable gains from current price levels.
Moreover, the volume profile indicates increasing trading activity, often preceding a breakout. Additionally, the Relative Strength Index (RSI) is currently hovering around 48.65, suggesting that DOT is neither overbought nor oversold. This neutral RSI level provides further room for upward momentum.
Criticism Over Polkadot’s High Expenditure
However, Polkadot is facing criticism for its hefty $87 million spending in early 2024, leaving it with a reduced balance of $245 million, of which $188 million is liquid. The breakdown includes $36.7 million for advertising and events, $15 million for trading platform incentives, and $23 million for development. However, despite these investments, Polkadot trails behind Ethereum and Solana in network activity, developer engagement, adoption rates, revenue, and total value locked.
Some community members speculate that the backlash may lead to a correction in DOT’s value in the coming days. The concerns about its financial decisions throw light on the network’s challenges in achieving visibility and adoption in a highly competitive market. The community’s ongoing scrutiny emphasizes the need for more strategic spending to drive tangible growth and development.
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