The Polkadot price retreated in the overnight session as the Bitcoin price dropped by more than 7%. DOT is trading at $36, which is about 8% below its highest level yesterday. Polkadot has a market cap of more than $33 billion, making it the eighth-biggest cryptocurrency in the world.
Polkadot performance: For starters, Polkadot is a blockchain project that lets developers build decentralized apps. DOT is the native currency for this ecosystem just as ETH is the currency for the Ethereum network.
Polkadot price has jumped by more than 1,200% in the past 12 months. This performance is mostly because of several reasons. First, Bitcoin and altcoins like Chainlink, Binance Coin, Theta, and Litecoin have all surged during this period. This is mostly because of irrational exuberance caused by Fed policies.
Second, Polkadot has a popular name behind it. The network was started by Gavin Wood, one of the founders of Ethereum. Investors tend to love platforms started by popular individuals with a good name recognition. For example, Travis Kalanick’s new company, Cloud Kitchens is valued at billions of dollars. Kalanick founded Uber.
Third, Polkadot price has rallied because of increased user adaption as more developers look for quality alternatives to Ethereum. The chart below some of the popular projects built on Polkadot like Kusama and Acala Network.
The daily chart shows that the Dot price has formed a broadening channel pattern. This is a popular pattern used in price action that most traders interpret as being bearish.
The currency has also formed what looks like a head and shoulders pattern that is usually bearish as well. It is also at the 25-day and 50-day moving averages. Therefore, at this stage, the outlook is neutral with a bearish bias. The bearish trend will be validated if the price manages to move below the important support at $28.
On the flip side, the channel pattern can also be viewed as a bullish flag since it formed after a major rally. This could see the price surge above its all-time high. To do this, bulls need to move above $47.
Please don’t consider this investment advice. Views expressed here are those of the writer and the writer and InvestingCube will not be held liable for any losses.
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