• The cryptocurrency has hit a resistance level that is expected to weigh on the price and delay any strong upside move.

• A short-term correction seems inevitable.

Despite some remaining positive sentiment, Polkadot [DOT] is struggling to show any strong momentum across different timeframes. After falling 2.18% in daily trading, the bearish pressure is expected to continue.

This expected decline is driven by waning buying pressure as trader sentiment softens. However, a bullish tone remains, signaling a potential recovery once market conditions improve.

DOT chart short term bearish amid supply zone pressure

DOT is showing a short-term decline on the charts, despite trading within an overall ascending channel—a bullish pattern. The asset recently encountered a supply zone between $4,512 and $4,563, which has contributed to its current price decline.

This pressure has caused DOT to break the first support level at $4,258, which also corresponds to the Fibonacci retracement level at the same point. The price is now approaching the next support level at $4,182, according to the Fibonacci indicator.

Source: Trading View

If selling pressure increases, DOT could drop as low as $4,086 before finding balance and potentially resuming the uptrend.

The current selling pressure is likely to continue, as on-chain data suggests that trader sentiment remains bullish on the asset.

Polkadot Rebound Effect as Trader Confidence Weakens

On-chain metrics indicate that trader confidence in DOT is waning, potentially pushing the asset lower in the short term.

According to data from Coinglass, Open Interest (OI)—which tracks the number of outstanding derivative contracts, specifically futures trading—has seen a significant decline.

DOT’s OI recently fell by 1.43%, bringing its value down to $229.07 million. This indicates an increase in short contracts, with traders increasingly staking on further declines in DOT’s price.

Source: Coinglass

Liquidation data supports this trend, showing an increase in losses for long-term traders who were previously bullish on price increases but are now feeling the effects of bearish sentiment.

Of the total $136.72k in liquidated trader positions, long traders accounted for $123.21k, as the market shifted mainly towards short positions.

Are bulls looking for more profitable entry points?

DOT remains bullish, trading within an ascending triangle—a pattern that signals bullish potential. Interestingly, TinTucBitcoin has also identified another bullish indicator, confirming continued signs of strength.

At the time of writing, data from Coinglass reveals that exchange Net Flow has been mostly negative on daily and weekly timeframes.

Negative net flows typically indicate that traders are withdrawing assets from exchanges, implying that they intend to hold rather than sell—a bullish signal.

Source: Coinglass

With $274.82K and $3.59M in Exchange Net Flow recorded on a daily and weekly basis respectively, the overall market sentiment remains bullish.

The recent price drop can be interpreted as bulls looking for an optimal entry point, preparing to accumulate DOT in large quantities.

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