According to CryptoPotato, Polkadot's price has experienced a significant drop, finding support around the crucial $6 mark. The cryptocurrency's price has shown minor fluctuations, indicating low volatility, but it remains within a critical range, suggesting a potential breakout. An in-depth analysis of the daily chart shows a period of subdued price action and sideways consolidation near the $6 mark after a significant drop below the 100 and 200-day moving averages. This pattern indicates a bearish market sentiment, with sellers currently dominating. However, Polkadot is currently within a decisive range, marked by the support at $6 and the significant 200-day moving average at $6.93.
A bullish surge above the 200-day moving average could lead to sustained upward momentum, targeting the pivotal $10 mark. On the other hand, if the bearish momentum continues, a continuation of the downtrend towards the substantial $5 support level becomes increasingly likely. A detailed analysis of the 4-hour timeframe indicates that after a significant drop triggered by a long-squeeze event, the downward momentum was met with increased demand, leading to a modest rebound near the critical $6 level. A visible bullish divergence between the price and the RSI indicator on the 4-hour chart also suggests the potential for corrective retracements in the short term.
In the broader perspective, Polkadot remains within a pivotal range, bounded by $6 and $9, and is expected to oscillate within this range until a breakout occurs. The perpetual futures segment has exerted considerable influence over crypto prices. When this market becomes overheated, characterized by aggressive long and short positions, it tends to spur heightened volatility and sudden price shifts. Thus, gauging the futures market’s state is a valuable tool for predicting incoming dynamics. A relevant metric in this evaluation is Polkadot’s Open Interest (OI) chart, which tracks the sentiment within the futures market alongside price movements. It quantifies the number of open perpetual futures contracts across various crypto exchanges. Higher OI values correlate with increased volatility, and conversely, lower values signify calmer market conditions. A notable downturn in both the OI metric and the price of Polkadot coincides with recent geopolitical tensions in the Middle East, which have exerted downward pressure on market sentiment. The substantial drop in Open Interest primarily stems from the liquidation of a significant number of long positions in the perpetual markets. Consequently, the market appears to be undergoing a period of cooling off, potentially setting the stage for a renewed influx of both long and short positions in the futures market. This, in turn, could catalyze a fresh surge in market activity and raise the possibility of intensified volatility.
