Ever wondered if the recent downturn in Polkadot’s [DOT] value could take a turn towards a price reversal, potentially extending to $4? This query has been on the minds of many investors as DOT has been navigating through a rough financial quarter.
A Snapshot of Polkadot’s Recent Performance
Polkadot’s bearish trend was evident in Q3 2023, and unfortunately, this trend persisted into Q4. In October alone, DOT’s value plunged by over 15%, slipping from $4.3 to a worrying $3.6. This slump was primarily due to a surge in market sellers since mid-July, resulting in a bearish outlook for DOT.
However, following a recovery in Bitcoin’s [BTC] losses, DOT showed signs of a potential price reversal.
Charting the Course of DOT’s Price Reversal
A Fibonacci retracement tool was applied between the lower high of $4.8 on August 29 and the recent dip of $3.6 on October 12. The tool suggested that DOT’s price reversal encountered overhead resistance at 23.6% Fib ($3.9) and 38.2% Fib ($4). The second resistance point at $4 also marked a daily bearish order block (OB), indicating potential hurdles for bulls if DOT prices exceeded $3.9.
On a positive note, the Spot market demand showed a slight increase, reflected by the uptick in OBV. Additionally, buying pressure also recovered, as shown by the RSI uptick, although it remained below the 50-mark threshold required to confirm a strong bullish reversal.
DOT’s Funding Rates and Market Demand
Despite the promising signs, DOT’s capital inflows remained limited, as depicted by the CMF’s downward trend. While the demand for DOT in the derivatives segment showed some recovery with Open Interest (OI) rates improving from $156 million to $169 million, funding rates were negative.
The price reversal saw bulls regain a slight market edge, as indicated by the surge in Cumulative Volume Delta (CVD). However, the higher timeframe market structure bias remained negative unless DOT surged beyond $4, and the negative funding rates could pose further challenges for bullish efforts.
For those looking to keep a keen eye on these developments, the cryptoview.io application provides an excellent platform to track the progress of DOT and other cryptocurrencies.
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