Polkadot

Polkadot (DOT) Faces Setback After Failed Breakout: Is a Bullish Rally Still Possible?

Polkadot’s native cryptocurrency, DOT, has caught the attention of investors as market excitement returns. Despite its potential for a bullish rally, DOT recently experienced a failed breakout from its descending wedge pattern, casting doubts on its immediate upward momentum.

Since December, DOT has been entrenched in a bearish trend, trading within a wedge pattern. It has consistently found support at the $6 price level, while a descending resistance line has capped its upside. Last week, DOT momentarily broke above this resistance, sparking optimism for a potential rally. However, the breakout was short-lived, with the cryptocurrency pulling back by 12% in the past two days to its current price of $6.61.

DOT
Source: TradingView

Is a Rebound on the Horizon?

The recent price dip positions DOT near its support level, presenting an enticing entry point for opportunistic buyers. Address activity data indicates a resurgence in investor interest, with active accounts bouncing from 5,154 on January 11 to 8,038 on January 17. Similarly, new addresses rose from 1,459 to 2,069 in just two days, suggesting growing anticipation for a rebound.

DOT
source: Polkadot.subscan.io

This renewed activity has also influenced DOT’s Open Interest, which climbed from $439.02 million on January 14 to $524.36 million on January 18. However, at the time of writing, Open Interest has dipped to $475 million, signaling mixed market sentiment.

Challenges Ahead

DOT faced over $10 million in spot outflows in the past two days, aligning with its declining price and negative Open Interest. Liquidation data further revealed nearly $3 million in long positions wiped out during this period, reflecting cautious leveraged trading.

DOT
source: Coinglass

For DOT to achieve a sustained rally, it will need stronger demand and reduced short-term profit-taking. While the current accumulation

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

Also Read: Polkadot (DOT) Price Prediction: Is Polkadot a Good Investment for 2025-2030?

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