The Polkadot price has struggled in the past few months even as the parachain auctions goes on. DOT is trading at $25.50, which is the lowest level it has been since September 7. It has crashed by more than 53% from its highest level in November. Similarly, the Kusama price has fallen by more than 45% in the same period.
Parachain auctions
The Kusama and Polkadot prices have tumbled even as the ecosystem goes through the biggest event of the year.
Polkadot is currently running what is known as parachain auctions. This is an important event where members of the network are able to vote for their preferred projects. This voting is done using DOT, Polkadot’s native token.
In the past few weeks, we have seen several projects win the auctions. Some of the notable winners are Karura, Subsocial, Polkasmith, and Sakura.
In theory, Polkadot should be doing well during these auctions but it has not. This performance is simply because investors were expecting the auctions to be relatively successful. As a result, they bought Polkadot and Kusama before the auctions started. This is known as buying the rumour and selling the news.
The DOT price has also struggled because of the overall performance of cryptocurrencies. In the past few weeks, most cryptocurrencies like Ethereum and Bitcoin have all tumbled as investors focus on monetary policy.
As I wrote earlier, there are concerns that the Federal Reserve and other central banks are starting to unwind their pandemic policies. The Fed is slowly ending its pandemic support measures by unwinding its quantitative easing policies. It expects to start hiking interest rates in the coming year.
Other central banks have started hiking rates. This week, the Bank of England surprised investors when it hiked rates. Norges Bank and New Zealand central banks have also hiked rates.
Kusama price prediction
The daily chart shows that the KSM price has been in a major bearish trend in the past few weeks. Kusama managed to decline below the key support that is shown in red. This price was slightly below the lower side of the rising channel.
The coin has also moved slightly below the 25-day and 50-day moving averages. It also declined below the Ichimoku cloud. The Relative Strength Index (RSI) is also slightly above the oversold level.
Therefore, there is a likelihood that the Kusama price will keep falling as bears target the next key support level at $200.
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