- Polka dot bears have dominated this year, but the bulls may soon have a chance to change the outcome.
- Demand remains low, but the growth of Polkadot’s DeFi hub TVL signals long-term optimism.
The Polka Dot [DOT] Blockchain’s own cryptocurrency DOT has been a honeypot for the bears in 2024. It has delivered an overall downtrend despite starting the year with strong bullish momentum.
Recent observations suggest the tables are about to turn for DOT.
Long-term DOT price action traded within a descending wedge pattern starting from the mid-March highs. Since December 2023, the economy has hit lower lows.
An interaction with the descending resistance line towards the end of July caused a new wave of selling pressure. The press time price of $5.37 was only a 7% decline from the retest of the next support level.
Source: TradingView
DOT’s bearish wedge pattern revealed that the price is currently in a bottleneck where accumulation is likely to occur. But will this lead to an outbreak?
Assessment of the DOT bullish breakout opportunity
Zooming out on the DOT chart revealed that the price is within a historical accumulation zone. Meanwhile, the wedge pattern underlined a higher likelihood of a pattern break.
The fact that the price was significantly reduced in recent months also added to the bullish probability. Therefore, many merchants might see the latest extended discount as an attractive entry point.
The current trajectory suggests that DOT traders should anticipate strong support within the $4.9 price level if the downtrend continues. However, that doesn’t necessarily mean the price won’t fall lower.
Will the bulls recover quickly? Based on our assessment, there was a serious shortage of demand in the last week of July. This was clearly evident from the free price decline observed during the same period.
The DOT open interest heatmap worked in tandem with the same observation. DOT open interest has remained cool since July 24.
Source: Hyblock Capital.
DOT was close to a historical demand zone at the time of the timekeeping. We will observe this zone to identify signs that may indicate accumulation. Nevertheless, the falling price could indicate that investors have lost confidence in the project. This was further aided by the decline in developer activity.
Source: DeFiLlama
It wasn’t all negative news, however. HydrationPolkadot’s decentralized finance recently offered some optimism.
Read Polkadot [DOT] Price forecast 2024-2025
The platform, formerly known as HydraDX, has grown. The TVL rose to an ATH in July after explosive growth since early 2024.
Hydration’s impressive Omnipool TVL growth could be a signal that long-term holders are deploying their DOT. Perhaps a sign that DOT holders remain optimistic in the long term.