- DOT’s price action was withdrawn after the previous uptrend failed to secure sufficient liquidity.
- Demand levels or selling pressure could be key, especially as market expectations grow.
DOT, Polkadot’s native cryptocurrency, could be a good candidate for a bullish rally as excitement returns to the market. However, the altcoin recorded a misguided attempt to break away from the wedge pattern significantly.
In fact, DOT has been in an overall bearish trend since December. However, it has so far proven support at the $6 price level. Meanwhile, the upper trend limit was limited by the downward resistance line. These support and resistance levels highlight the wedge pattern that DOT has been trading with for the past seven weeks.
DOT achieved a mid-week breakout of this downward resistance trend last week, raising hopes for more upside ahead. The breakout was short-lived, with the price falling about 12% over the past two days, reaching a press time price of $6.61.
Source: TradingView
The weekend decline highlighted the lack of strong enough demand to support significant upside.
Interestingly, market conditions over the past 48 hours have seen a resurgence of excitement and positive liquidity flows for some altcoins.
Is DOT ready for another attempt?
DOT’s discounted price also provided an opportunity for buyers to move closer to the support level.
Renewed interest among traders and investors is likely to support a strong recovery. Address activity also decreased as recently as January 11, with 5,154 addresses. This is the lowest level in the past three months.
Source: Polkadot.subscan.io
Active accounts are back to their recent high of 8,038 active addresses on January 17th. The number of new addresses also increased significantly from 1,459 to 2,069 over the past two days. This confirms that a significant number of holders are expecting a bounce from the support range.
The surge in address activity was reflected in DOT’s open interest, which increased from $439.02 million on January 14 to $524.36 million on January 18. However, this figure has been reduced to $475 million at the time of writing.
According to Coinglass, DOT has experienced spot outflows of more than $10 million over the past two days. This appears to be consistent with negative open interest and price declines in altcoins.
Source: Coinglass
The surge in spot flows confirmed that DOT traders remain focused on taking short-term profits. In fact, liquidation data shows that there have been just under $3 million in long-term liquidations over the past two days.
These liquidations resulted in relatively less funds being allocated to leveraged long positions. This could encourage accumulation, but the data shows that DOT is not receiving much attention at the moment.