Polkadot Drops 3% as Key Support Levels Tested
Polkadot (DOT) has encountered a critical juncture as it approaches key support levels at the start of May. The cryptocurrency is at a crossroads, with the potential to either rebound or face further decline. The resistance zone for DOT remains a significant barrier, and the next few trading periods on both weekly and daily charts will be pivotal in determining its trajectory.
Ask Aime: Is Polkadot's (DOT) technical analysis pointing towards a break through its current resistance zone?
As of the latest candle close, DOT is trading around $3.98, with hourly charts revealing sustained selling pressure. The price has decisively broken below the short-term support range around $4.10, and has lost grip of all key short-term moving averages (20, 50, and 100 SMA). The hourly 200 SMA, which often acts as the final defense for bullish momentum, is well above the price at $4.16 — now serving as stiff resistance.
On the daily chart, DOT price rejection from the 100 SMA (currently at $4.48) capped the recent rally. The 50 SMA is currently positioned at $4.06, and the price is now sitting just below it. This confluence suggests a weakening bullish structure with an increasing risk of further decline if DOT closes a few more candles below $4.00.
Ask Aime: "Will Polkadot (DOT) rebound or face further decline as it approaches key support levels?"
Looking at the Accumulation/Distribution Line (ADL), DOT shows a concerning pattern. Despite slight upticks in price during late April, the ADL failed to make a corresponding higher high. This divergence signals that smart money may be exiting positions during price relief rallies. On the hourly chart, the ADL continues its slow descent, confirming that bearish sentiment is currently stronger than what surface-level price action suggests.
Volume has also dried up, meaning there's little conviction from buyers to defend the $4 mark. Unless a catalyst emerges to spike demand, this stagnation may lead to a stronger downside move in the coming sessions.
The broader chart structure indicates that Polkadot price is at a decision point. If DOT price loses the $3.90 support with volume, it could swiftly drop to $3.60 or even test $3.30 — a level not seen since Q1 2023. However, if bulls manage to reclaim $4.10 and sustain above the 50 and 100 daily SMA, a short-term rally to $4.50 or even $5.00 becomes plausible, especially if the crypto market as a whole regains momentum.
Momentum indicators on lower timeframes hint at a possible oversold bounce, but without volume confirmation, any relief may be short-lived.
May could be make-or-break for DOT price. The current technical landscape suggests caution, as Polkadot price is at risk of losing its footing. However, these conditions also often precede strong reversal rallies — if bulls show up. A decisive reclaim of $4.10 would flip the script in favor of buyers, while sustained weakness below $3.90 could open the floodgates for deeper losses.
The current market dynamics for Polkadot are influenced by broader trends in the cryptocurrency space. Bitcoin, for instance, is showing signs of strength as it approaches a critical resistance level. This has ignited hopes of a push toward the long-anticipated milestone. Bitcoin's market indicates increased participation without dangerous levels of leverage, suggesting organic growth rather than speculative excess. The amount of BTC held on exchanges has declined, signaling that holders are storing their assets in personal wallets, which reduces immediate sell pressure and creates a more stable environment for growth.
On-chain data for Bitcoin further supports the bullish sentiment. Daily active addresses on the Bitcoin network have surged, indicating growing interest and adoption. This metric aligns with extended bull runs in past cycles, suggesting that Bitcoin's current rally is backed by real demand. Profitability among Bitcoin holders is increasing but not to levels that typically fuel widespread profit-taking, allowing for further gains without triggering a sell-off.
From a technical standpoint, the level is crucial for Bitcoin. If it can decisively flip this range into support, the path toward previous highs and even the milestone becomes more realistic. The Relative Strength Index (RSI) is close to overbought but not yet at extreme levels, giving bulls some breathing room for further price increases before a pullback becomes likely.
The broader cryptocurrency market is also seeing significant movements. Dogecoin and Hedera Hashgraph are forecasted to have an 80% chance of success, while Polkadot, Cardano, and Avalanche each carry a 75% chance. These projections have triggered expectations of further growth in the market. Solana, facing resistance, is seen as a solid candidate for long-term holding despite short-term risks. Bitcoin's recent golden cross on the daily chart further supports the bullish outlook, indicating a classic bullish signal.
