Polkadot Price Hits Multi-Year Support in Oversold State; Rebound Imminent?

Polkadot price is down 2% in the last 24 hours as the crypto market witnessed renewed selling momentum during U.S. trading hours Wednesday. Leading cryptocurrencies, Bitcoin and Ethereum, also saw 2-4% declines, dropping to $54,700 and $2,351, respectively. The overhead supply pressure hints that the prevailing correction has not yet bottomed, and sellers could drive an extended downfall.

Polkadot Price Signal Reversal From Major Support

The crypto market recorded a notable correction in the past two weeks amid recent recession fears and a notable sell-off in traditional markets. The selling pressure plunged most of the major cryptocurrencies, including Polkadot (DOT), into aggressive downfall.

In the daily chart, Polkadot price fell from $6.47 to $3.6, registering a loss of 44.55%. The aforementioned support has been intact since October 2020, and the bottom was the last correction trend before the 233% rally.

The long-tail rejection candle highlights sustained demand pressure at the $3.6 support level, boosting altcoin by 26% to $4.5. Consequently, the Polkadot’s market cap surged to $6.68 billion.

In addition, the Relative strength index (RSI) indicator, at 29%, indicates that this DOT coin trades in oversold regions. This discounted value would attract more traders and could drive a 16% rally to $5.3 to challenge the downsloping trendline.

The on-chain data from The Block indicates a notable recovery in network growth activity for Polkadot. The number of unique addresses on the Polkadot Relay Chain (7-day moving average) increased from 956 to 1,100 within a week, reflecting a growth of approximately 15%. 

Additionally, the number of active addresses on the Polkadot Relay Chain (7-day moving average) surged from 5,630 to 7,030, marking a rise of about 25%. 

These increases indicate enhanced user engagement, growing network activity, and potentially greater adoption and utilization of the Polkadot ecosystem.

On a contrary note, broader selling pressure in broader markets persists, which could bolster sellers’ rechallenge of the $3.6 bottom. A potential breakdown below will signal the continuation of the downtrend and may plunge Polkadot price by 18% to hit $3 psychological support.