Polkadot price has risen in the past two straight days as the recent sell-off takes a breather. After falling to a low of $6.77 on Wednesday, DOT bounced back to $7.61 on Friday. This performance was in line with how other coins traded, with Bitcoin rising back to $20,000 and the total market cap of all cryptocurrencies approaching $1 trillion.
Polkadot price performance has been in line with that of other cryptocurrencies. After peaking at $55 in November last year, the coin dropped and reached a low of $6 this year. Recently, the coin has been in a consolidation phase as investors wait for Ethereum Merge.
A closer look at Polkadot’s ecosystem shows that most of its parachains are struggling. For example, in August, a stablecoin in Acala’s ecosystem fell by 99% as it lost its peg. aUSD lost its peg after a hacker minted billions of tokens without providing any collateral. As a result, the total value locked (TVL) in Acala has crashed from over $1 billion to just $43 million, according to DeFi Llama.
Other parachains have not performed well. For example, Moonbeam has seen its TVL crash from over $275 million to $58 million while Moonriver has crashed from $353 million to $77 million. Therefore, there are concerns about the performance of Polkadot as its ecosystem growth stalled.
Polkadot has been in a strong bearish trend for months. The coin’s sell-off saw it crashed below the important support at $14.25, which was the lowest level in February. It has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point. A closer look shows that the coin is forming a double-bottom pattern, which is usually a bullish sign.
Therefore, there is a likelihood that it will drop and retest the second part of the double-bottom pattern at $6. If this happens, we can’t rule out a situation where it stages another rally in the coming months. A drop below this support will invalidate the bearish view.
This post was last modified on Sep 09, 2022, 07:32 BST 07:32