Polkadot Faces Selling Pressure Amid Market Downturn
Polkadot (DOT) is falling from last week’s highs, trading at $4.20 on Monday. This drop follows a broad decline in the crypto market. Investors are watching the U.S. Federal Reserve’s possible interest rate cut on Wednesday. Despite short-term weakness, Polkadot shows strong potential. This is due to a new supply cap and a bullish chart pattern.
Polkadot Community Approves Supply Cap
The Polkadot community passed Resolution 1710, with 81% voting to limit the maximum supply to 2.1 billion DOT. This change reduces the yearly token emissions. It supports scarcity and predictability for DOT.
- Before, Polkadot had no maximum supply limit.
- The current supply is about 1.52 billion DOT.
- The new cap means supply will not exceed 2.1 billion DOT.
- New token issuance will decrease every two years on March 14.
- Under the new model, total supply is expected to reach 1.91 billion DOT, less than the previous 3.4 billion DOT forecast.
Demand for Polkadot remains strong. Futures open interest is around $594 million, down from a peak of $634 million on Sunday. The price drop from $4.62 to $4.20 partly caused this decline. The correction may continue short term, but medium-term prospects look positive.
Technical Outlook: Key Support and Potential Breakout
Polkadot is trading below its 200-day Exponential Moving Average (EMA) at $4.26. The Relative Strength Index (RSI) has dropped to 54, showing weaker bullish momentum. If RSI falls further, the price could test support near $4.00, where the 50-day and 100-day EMAs meet.
On the upside, Polkadot is forming an ascending triangle pattern. A breakout above $4.67 could lead to a 35% price rise to $6.34. Traders will watch for this key resistance level to confirm a bullish move.
Another positive sign would be a Golden Cross. This happens when the 50-day EMA crosses above the 100-day EMA. It signals growing bullish sentiment in the market.
