Polkadot price dropped to an important support level as investors focused on the latest interest rate decision by the Federal Reserve. DOT was trading at $6.57, which was slightly above the year-to-date low of $6. Its market cap has dropped to $7.3 billion, which was lower than its all-time high of over $30 billion.
Polkadot price has been falling recently for two main reasons. First, there are significant challenges emerging in its ecosystem. The latest data shows that its key parachains like Acala, Moonbeam, and Efinity have been struggling. For example, aUSD, a stablecoin for Acala Network lost its peg a few weeks ago. While the coin has made a steady recovery lately, it is trading at $0.85, which is below $1.
The total value locked (TVL) of the top Polkadot projects has crashed to the lowest level in months. Acala’s TVL has crashed from over $1.5 billion to $57 million while MoonRiver’s TVL has dropped from over $380 million to about $48 million. Therefore, Polkadot price has crashed as investors wait for the next catalyst.
Second, DOT price has dropped sharply because of the rising interest rates. On Wednesday, the Federal Reserve decided to hike interest rates by 0.75% for the third straight time. The dot plot also hinted that the bank will hike again by 0.75% in November and by 0.50% in December. As a result, both cryptocurrencies and stocks have come under pressure as bond yields surge.
The daily chart shows that DOT price has been in a strong bearish trend in the past few months. This week, the coin managed to drop to the key support level at $6, which was the lowest level this year. A closer look shows that Polkadot has formed a double-bottom pattern, which is usually a bullish sign.
Therefore, there is a likelihood that the coin will bounce back in the coming days. If this happens, the next key resistance level to watch will be at $10. However, a move below $6 will invalidate the double-bottom pattern and lead to more pain.
This post was last modified on %s = human-readable time difference 09:28