should you buy the DOT dip?
Polkadot price has been in a strong sell-off in the past few months amid a prolonged cryptocurrency sell-off. DOT plunged to a low of $6.1, which is slightly above this week’s low of $5.69. It has surged by more than 88% from its highest level in 2021. As a result, the total market cap has dropped to about $6.9 billion.
Polkadot ecosystem challenges
Polkadot is a unique blockchain project that was created by Gavin Wood, a computer programmer who was a co-founder of Ethereum.
It is a unique one compared to other projects like Solana, Ethereum, and Cardano. It focuses on parachains, which are sovereign applications that are supposed to work with each other.
The core of the Polkadot network is known as the Relay Chain. It is described as the nucleus of the network and is responsible for securing, governing, and connecting the parachains. According to how it is developed, the Relay Chain can support between 100 and 250 parachains.
Recently, however, a closer look at the parachains show that they have been having a challenging period. The most troubled one was Acala, one of the biggest challenges in the world.
Earlier this year, Acala USD (aUSD), which powers the network lost its peg. It is now trading at $0.7, which is much lower than where it should be at $1. As a result, Acala Network’s total value locked (TVL) has crashed to $47 million from its all-time high of $113 million.
Other parachains like MoonBeam, MoonRiver, and Karura have all stumbled. For example, Karura’s TVL has crashed to $14.6 million while MoonRiver has dropped to $110 million.
However, there are some emerging Polkadot platforms. For example, Phala Network coin has jumped by more than 200% in the past 7 days. Others like Energy Web Token (EWT), and Ankr have done well recently.
Polkadot price prediction
The daily chart shows that the DOT price has been in a strong bearish trend in the past few months. It dropped below the important support level at $10.33, which was the lowest level on July 2021. The coin has moved below all moving averages while the Relative Strength Index (RSI) has moved below the neutral level of 50.
DOT is sitting at the lowest level this year. Therefore, the outlook for the coin is neutral. A drop below the support at $5.70 will signal that bears have prevailed and will see it continue falling. A move above the resistance level at $7 will signal that bulls have returned, which will see it rise to $8.