Polkadot [DOT] enters a critical support level, should investors bet on it?

The DOT continues to bleed as the bear market extends for another week, with no signs of abating. This has been particularly the case over the past two days, in which selling volumes have increased after the failed rebound.

Today the cryptoThe currency is approaching another support and resistance level near $7, but the question is, will it reverse or maintain its bearish trajectory?

DOT was trading at $8.11 at the time of this article’s publication, following a slight rally in the past few hours after falling as low as $7.30. Zooming out reveals that the $7 price level has historically acted as a support and resistance zone. There is a high probability that DOT will see some upside if the $7 price level provides enough support.

There are many reasons to expect a rebound from support. The price is already deep in the oversold zone as indicated by the RSI. The IMF has so far seen strong outflows that coincide with the current price level. The slight bullish rally after entering the support zone suggests that there has been some accumulation, but this has not been recorded in the MFI.

Some of the metrics on the DOT channel are currently in favor of a bullish recovery. For example, the supply held by whales has seen an uptick in the past 24 hours, suggesting whales are buying low. The same metric has recorded significant exits from whale addresses over the past four weeks.

Binance’s derivatives funding rate crashed between May 9 and May 11, reflecting reduced interest in the derivatives market. However, the rise seen in the last 24 hours suggests that the derivatives market is interested in DOT at the lower price levels.

Is there a risk of the situation worsening?

The absence of a significant rise in the MFI and RSI, despite being deeply oversold, reflects the absence of sufficient buying pressure. This is due to low investor confidence as the market struggles to shake off the fear of risk. On the same subject : Ethereum is showing positive signs but this resistance is key.. Consequently, the bears maintained a strong hold on the price action of DOT.

The relentless selling that has prevailed over the past few days could continue over the weekend. If so, it is quite possible that the DOT will fall to $5 or less.

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Thomas Estimbre
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