Polkadot (DOT) Price Analysis: Will it Drop to $5 Amid Declining Value?

• Polkadot (DOT) risks dropping to $5 amidst declining value and weakening on-chain and technical setup.
• Investors anticipated a price rally after the recent Bitcoin halving that normally ushers in a bullish wave.

Polkadot (DOT) investors have reason to be worried about the altcoin’s recent performance which points to a bearish outlook. DOT prices have recently stalled leading to investor concern about the short-term to mid-term price outlook. If the prevailing bearish pattern persists, there’s a chance DOT will slip further lower.

Crypto investors anticipated that the recently completed Bitcoin halving would usher in a new bull wave, but with BTC showing weakness, altcoins are struggling to build momentum.

Some key metrics show DOT could be facing a bearish trend. Metrics like the Sharpe Ratio, which measures risk-adjusted returns, show a negative value for Polkadot (-4.32). This indicates a potential lack of reward for taking on the risk of investing in DOT.

Additionally, the Relative Strength Index (RSI) suggests a potential price dip for Polkadot. While not oversold (below 30), the RSI’s inability to consistently rise above 50.0 indicates a lack of momentum, hinting at a future price decline.

At the time of writing, DOT is trading for $6.93 after a 1.5% price rebound. This surge suggests that while indicators are bearish, Polkadot’s future price is a mixed bag, with some investors expecting gains while others predict losses.

Bulls will be keen to maintain the found bullish momentum, the altcoin faces resistance in the $7 level. Caught between a descending price channel, exhibiting some resistance momentarily. But technical indicators suggest a possible drop that could bring the price down to the channel’s lower trend line at $5. This would be the lowest point for DOT in five months.

However, if DOT can sustain a break above $7 and maintain the bullish momentum, the next key resistances will be the $8 and $9 levels.

As CNF reported, earlier this week, the runtime upgrade of Polkadot’s mainnet led to an unintended pause in block production across different parachains.

The recent Polkadot runtime upgrade is a response to an announcement regarding the release of the JAM protocol, which is expected to replace the current Relay Chain interoperability protocol. This release is a major milestone in Polkadot’s architecture, reflecting a move towards a modular and simplified approach to improving overall performance and scalability.

Although prices could continue struggling in the short term, the long-term outlook is positive. Developments around the network continue to play a vital role in attracting value to the digital asset.