- DOT has shown classic signs of a healthy, growth-oriented retracement.
- But patience may be tested before a breakthrough materializes.
Polkadot (DOT) reflected a recovery in the broader market, emerging from a four-month slump that saw it soar near $6 amid post-election hype. However, after three days of declines, it fell to $4.75, close to a daily low of 7%.
As is often the case in cryptocurrencies, every ‘drop’ presents an opportunity for investors to see resistance as new support, pushing the price higher. As of press time, it is trading at $5.64, and if DOT follows this strategy, it will likely break the $6 cap and reach $7 as its next target.
Consolidation is needed for DOT to break $6.
Interestingly, DOT’s high near $6 coincides with an overbought RSI on the daily chart, indicating overheated conditions. This caused traders to fear an imminent correction and exit the cycle before it occurred.
Typically, an exit without sufficient buying pressure leads to a decline. In contrast, consolidation (maintaining a balance between buying and selling) often sets the stage for a breakout.
Looking at the daily chart of DOT, the retracement brought the price down to almost $4.775. However, two huge green candlesticks that each made higher highs in the days that followed show that bulls took advantage of the downtrend to buy DOT tokens at a discount.
Certainly, the bulls are confident about Polkadot’s long-term prospects, but this may not be enough to guarantee a clear breakout. For a breakout to materialize, the bulls would need to hold the price above $5, potentially triggering a consolidation.
The reason is clear. When considering the overall market performance of other coins, Polkadot is still lagging. rivalMany of them posted impressive double-digit weekly gains. This volatility makes DOT more susceptible to Sharps. swing.
Therefore, to avoid panic selling, bulls should focus on maintaining the current momentum. Continuous accumulation is important to prevent DOT reversals, stabilize prices, and lay the foundation for continued growth.
$7 may still be too ambitious.
As mentioned earlier, DOT is showing typical signs of a healthy, growth-oriented retracement, and the price is expected to fluctuate within a defined range over the next few days.
This behavior is a result of strategies used by spot traders to maintain DOT consolidation, especially in markets facing uncertainty.
The next significant move towards $7 will largely depend on whether Bitcoin breaks a key psychological level, but a consistent red candlestick moving south in the chart below indicates a bullish outlook and a possible DOT breakout towards $6. indicates.
Source: Coinglass
However, despite net outflows reaching a yearly high of $16.3 million, the impact on DOT prices was the opposite of expected. High net outflows typically indicate aggressive accumulation, but the 7% decline in DOT indicates a potential distribution of large HODLers.
So, without this dynamic, it may be difficult for DOT to target the next $7.
Read Polkadot (DOT) Price Forecast for 2024-2025
While continued buying is expected to stabilize Polkadot and confirm $5 as new support, a more significant build-up from large HODLers will likely determine whether DOT can approach $6.
If BTC crosses $93,000, this could convert and give whales a decent incentive to enter.