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Key Insights:
- Polkadot price has formed a double-bottom pattern on the daily chart.
- Hydration, a key part of Polkadot’s ecosystem, has gained millions in assets.
- Polkadot’s staking yield has jumped to 11.8%, helping to offset its crash.
The crashing Polkadot price has formed a rare chart pattern. It could lead to a strong rebound in the triple digits in the coming weeks or months.
DOT price dropped to $3.45 on Friday, July 4, down by 70% from its November 2024 high and 35% from its highest level in May.
Polkadot Price Technical Pattern Signals a Potential Rebound
The daily chart shows that the Polkadot crypto price has been in a strong downtrend since November last year. This crash has coincided with the ongoing crypto market sell-off.
On the positive side, it has formed a double-bottom pattern at $3.20, its lowest level in April and May this year. Its neckline is at $5.36, its highest level in May when Bitcoin and most altcoins surged.
The profit target in a double-bottom pattern is first established by measuring the distance between the neckline and the lowest side. The user then measures the same distance from the neckline. In this case, the target for the Polkadot price is at $7.75, up by 128% from the current level.
A clear break above the double-bottom’s target will raise the possibility of the coin rising to last November’s high of $11.65. It is 225% above the current level. This view aligns with the DOT price forecast.
On the flip side, a drop below the double-bottom level at $3.20 will invalidate the bullish DOT price forecast and point to more downside. Such a move will signal that there are still bears who are keen on pushing its price lower.
Hydration Total Value Locked Hits All-Time High
A potential catalyst for the Polkadot price is that its ecosystem has started to grow again after the initial stages of Polkadot 2.0 were implemented. One of the most successful stories is Hydration, a top player in the network’s decentralized finance (DeFi) ecosystem.
Data shows that its total value locked (TVL) has jumped to over $251 million, while the total trading volume in the last 30b days jumped to nearly $330 million.
The growing Hydration’s TVL is notable because it is about to flip Cardano, a highly popular chain that has accumulated just $326 million in TVL in the past few years.
A growing TVL and trading volume in a dApp can have a positive impact on the underlying chain and its token. That’s because it shows that the chain has a utility and is not a ghost chain.
Polkadot’s ecosystem will likely continue growing once developers complete the ongoing Polkadot 2.0 transition. It is a three-stage process that aims to transition the network.
Its asynchronous phase aims to make Polkadot one of the fastest chains in crypto by reducing the block time from 12 seconds to 6 seconds.
The agile coretime, on the other hand, replaced the traditional parachain auction process with a more flexible one. The parachain auction process was long and expensive. These two stages have already been implemented.
The final one, known as elastic scaling, will allow projects to lease additional computational cores when required. Elastic scaling has moved to Kusama and will be implemented on Polkadot in the current quarter, a move that may boost its price.
The Staking Yield Could Boost Polkadot Crypto Price
Meanwhile, Polkadot price may do well as the staking yield rises. StakingRewards data shows that Polkadot has a staking yield of about 11.8%, up by 1% in the last 30 days.
This staking yield is higher than that of other popular cryptocurrencies like Ethereum, Solana, and Sui. A high staking yield helps provide regular returns, which helps to offset the token drop. In Polkadot’s case, a $10,000 investment would yield about $1,183 in annual rewards.
Another potential catalyst for the DOT price could be that the SEC will likely approve Polkadot ETFs filed by 21Shares, Grayscale, and Tuttle Capital.
Can Polkadot Price Rebound?
Polkadot price has been in a strong downtrend and is hovering near its all-time low. This crash may be about to end after the token formed a double-bottom pattern on the daily chart.
DOT token’s fundamentals are also improving, as evidenced by the rising staking yield and increasing total value locked in its parachains.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
