Polkadot price crashed below a crucial support level this week, risking further downside as demand waned. The DOT token plummeted to a low of $3.2, its lowest level since August 2020, and 74% below its highest point in November of last year.
This crash has pushed its market capitalization to $5.25 billion, down from $16 billion in August last year.
Polkadot Price Technical Analysis
The three-day chart indicates that the DOT price has been in a downward trend since peaking at $11.82 in November of last year. It plunged to a low of $3.20, its lowest level in years.
Most importantly, the token crashed below the important support level at $3.56, its lowest swing in October 2023, August, November 2024, and April this year. Moving below that level is a sign that bears have prevailed.
The Polkadot price has plunged below the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has moved below the 50% middle line, indicating that the downtrend is nearing the oversold level.
The DOT price has moved below the Supertrend indicator, a sign that bears are in control. Therefore, the token is likely to continue falling, with the next key point to watch being $3.0. A drop below that support level will likely indicate further downside, potentially to the support level at $2.50.
On the other hand, a move above the 50-day EMA at $4.46 will invalidate the bearish view, as it will signal that more buyers remain in the market.
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Why DOT Price is Crashing
There are several reasons why the Polkadot price has declined over the past few months. First, the crash is in line with that of most altcoins, which have all fallen in the past few months. For example, the Solana price has plunged by 51% from its highest point in January.
Similarly, Sui price has plunged from the year-to-date high of $5.35 in January to $2.60 today. The Injective token has dropped from $34 in January to $10.9 today. Altogether, the market capitalization of all altcoins excluding Bitcoin, Ethereum, and stablecoins has dropped from $947 billion in January to $577 billion today.
Further, there are signs that the transition to Polkadot 2.0 has not led to more developers embracing Polkadot. The main feature of the Polkadot 2.0 upgrade was agile core time, which replaced the previous parachain slot auction model, which was highly expensive and time-consuming.
A few developers have launched products on Polkadot, with the most popular one being FIFA Rivals, a popular FIFA-branded game. The other top integration was Harbour, which launched instant stablecoin payments between EU banks and Polkadot.
However, Polkadot has not attracted developers in areas like decentralized finance (DeFi) like other chains.
The DOT price has also dropped due to the declining number of active users. Artemis data shows that the daily active users have dropped to just 4,000, down from nearly 17,000 in the previous month.
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