Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Polkadot saw its market structure turn bearish earlier this month.
- A price move to $4.6 was brewing, but further losses would indicate a drop as far south as $3.9 is on the table.
Dot [DOT] saw the bears make a convincing downward move after the break of the market structure in early August. Social statistics and development activities increased, but this could not discourage the sellers.
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The price chart showed that a downtrend was underway and a move to $4.6 was very likely. Whether or not the bulls can defend that level of support remains to be seen. The latest development could allow DOT to drop below $4.
Attempts to defend $5 over the past two weeks have left buyers exhausted
![Dot [DOT] drops below $4.84, will prices fall below $4 later this year?](https://statics.ambcrypto.com/wp-content/uploads/2023/08/PP-2-DOT-price.png)
Source: DOT/USDT on TradingView
On August 2, DOT dropped below a recent higher low of $5.1. Highlighted in orange, it indicated a break in the market structure in favor of the bears. After that, the price bounced between the $4.95 and $5.06 levels until August 15.
About 36 hours before going to press, the bears seized the initiative. On the back of a Bitcoin [BTC] rejecting it for $29.6k, the DOT sellers forced prices to $4.62 on Aug. 15.
The Directional Movement Index showed that a strong bearish trend was imminent, and the RSI also signaled strong bearish momentum. The CMF, on the other hand, registered a remarkable inflow of capital into the DOT market.
Fibonacci retracement levels (yellow) were plotted based on the mid-June rally. The 78.6% level at $4.59 was one bulls had to defend. It comes along with the bullish D1 order block from June.
A daily trading session near $4.59 would indicate that the bears remain dominant. It would likely encourage a downward move to $3.92.
The open interest and financing rates supported the bearish idea
![Dot [DOT] drops below $4.84, will prices fall below $4 later this year?](https://statics.ambcrypto.com/wp-content/uploads/2023/08/PP-2-DOT-OI.png)
Source: Mint glass
The Open Interest made some gains from August 8 to August 11. During this time, DOT hovered around the $5 support level. After August 15, the OI saw a sharp plunge as prices fell. This suggested bearish sentiment in the market, but did not indicate an increase in short positions in the market.
![Dot [DOT] drops below $4.84, will prices fall below $4 later this year?](https://statics.ambcrypto.com/wp-content/uploads/2023/08/PP-2-DOT-funding-rate.png)
Source: Mint glass
Realistic or not, here is DOT’s market cap in terms of BTC
The funding rate sank deep into negative territory. It had a value of -0.0182% at the time of writing, according to Coinglass data. Together, the OI and the funding rate showed that bears had an advantage.
The financing rate turning negative suggested that the majority of the market wanted to sell DOT. This was not good news for long-term bulls who would like to see the $4.6 level defended. A Bitcoin recovery was one thing that could help DOT buyers.