- DOT’s price action pulled back after its previous uptrend failed to drum up enough liquidity
- Level of demand or sell pressure could be key, especially as market excitement grows
Polkadot’s native cryptocurrency DOT might be a good candidate for a bullish rally as excitement comes back into the market. However, the altcoin just recorded a botched attempt at a major breakout from its wedge pattern.
In fact, DOT has been in an overall bearish trend since December. However, it has so far demonstrated support at the $6 price level. Meanwhile, the upper limits of the trend were restricted by a descending resistance line. These support and resistance levels highlight the wedge pattern that DOT has been trading within for the last 7 weeks now.
DOT achieved a mid-week breakout from this descending resistance trend last week, raising hopes of more upside in the coming days. The breakout was short-lived though as the price pulled back by roughly 12% in the last 2 days to hit its $6.61 press time price.
Source: TradingView
The weekend pullback underlined the lack of strong enough demand to support a significant upside.
Interestingly, the situation in the market over the last 48 hours demonstrated a return of excitement in some altcoins and positive liquidity flows.
Is DOT ready for another attempt?
DOT’s discounted price also presented an opportunity for buyers to get in closer to the support level.
A strong comeback will likely be underpinned by renewed interest among traders and investors. Address activity recently dipped to 5,154 addresses too on 11 January – The lowest levels in the last 3 months.
source: Polkadot.subscan.io
Active accounts bounced back to a recent high of 8,038 active addresses on 17 January. New addresses also grew significantly from 1,459 addresses to 2,069 addresses in the last 2 days. This confirmed that a significant number of holders have been anticipating a bounceback from the support range.
The surge in address activity was reflected in DOT’s Open Interest as the same grew from $439.02 million on 14 January to $524.36 million on 18 January. However, figures for the same were down to $475 million, at the time of writing.
According to Coinglass, DOT saw over $10 million worth of spot outflows in the last 2 days. This seemed to be line with the altcoin’s negative Open Interest and declining price action.
source: Coinglass
The surge in spot flows confirmed that DOT traders are still focused on short-term profit taking. In fact, liquidation data revealed that slightly below $3 million worth of long liquidations occurred in the last 2 days.
These liquidations revealed that relatively low funds were allocated to leveraged long positions. This may encourage accumulation, but for now, the data suggested that DOT has not been receiving a lot of attention.
