Polkadot's Price at Risk: Will DOT Drop to $5? 📉

Polkadot Facing Bearish Pressure as Price Breaks Key Support

Polkadot’s price has recently experienced significant selling pressure, resulting in a breakout below the crucial $6 support area. This development indicates a bearish sentiment in the market, with the potential for further downward movement in the near future.

Technical Analysis

The Daily Chart:
- The daily chart shows intense selling near the critical $6 support level, leading to a breach of this significant support.
- This pressure is not limited to DOT but impacts all altcoins, with the price breaking below key levels and forming a bearish pattern.
- A death cross has occurred as the 100-day moving average crossed below the 200-day moving average, indicating a bearish sentiment.
- The price is likely to decline towards the $5 support area and may consolidate around this level.

The 4-Hour Chart

On the 4-hour chart, DOT has seen increased selling leading to bearish retracements and the formation of a bearish price channel.
After breaking below $6, the price retraced to this level, confirming the bearish scenario.
Heightened volatility is expected in the short term, with a potential retracement to $5.4 support and a consolidation phase between $5.4 and $6.

Sentiment Analysis

Following the breach of the $6 support level, Polkadot’s price triggered a long-squeeze event, liquidating a significant number of long positions. This event provides insights into potential future market movements.

In the mid-term, there is substantial liquidity near the $6 mark, potentially attracting buyers and influencing a bullish correction. However, the price’s ability to gather liquidity at this level could also sustain the bearish trend.

Hot Take: Short-Term Challenges Ahead for Polkadot

As Polkadot faces increased selling pressure and a bearish sentiment, the short-term outlook remains challenging for the cryptocurrency. Traders should closely monitor key support levels and market sentiment to make informed decisions during this period of heightened volatility.