Polkadot price may be on the verge of a strong bullish breakout, driven by rising community support for a hard cap. The DOT token was trading at $4.35 on Monday, up by 45% from its lowest level this year. This article explains what the new cap means for the network.
Polkadot Price to Benefit From the Hard Cap
Polkadot token has underperformed other top layer-1 networks like Ethereum, Solana, and Tron despite its strong potential. One reason for this is that it has been one of the most inflationary tokens in the crypto industry.
This inflation is based on the fact that 120 million DOT tokens are minted each year, and it has no supply cap. Most of the tokens are channeled towards stakers, who cheer the current yield of about 13%. Other tokens are channeled towards validators.
The challenge lies in that these tokens are then sold, thereby creating more supplies. The ongoing hard cap proposal will cap the supply at 2.1 billion tokens, with the new DOT issuance falling every two years. Therefore, there will be 1.9 billion tokens by 2040.
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Capping of DOT supply is one way that the Polkadot network is changing. For example, Polkadot 2.0 ended the expensive parachain auctions, making it easy for developers to build.
The other major change coming to the Polkadot network is the JAM upgrade, which will likely launch in 2026.
The Join-Accumulate Machine (JAM) upgrade will reduce the reliance of the Relay Chain and will be able to run many parallel cores, with each capsule capable of executing workloads independently.
DOT Price Technical Analysis
The daily timeframe chart shows that the DOT price bottomed at $3.02 in June. It then rebounded to a high of $4.50 this month, moving above the descending trendline that connects the highest swings since February 1 this year.
Polkadot price has moved above the upper side of the triangle pattern shown in blue. Most importantly, there are signs that the coin is in the accumulation stage of the Wyckoff Theory, meaning that a rebound may happen when it moves to the markup phase.
DOT price has moved above the 50-day Exponential Moving Average (EMA). More upside will likely push it to the key resistance level at $5.37, its highest point in May, which is about 25% above the current level.
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