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Swirling around Polkadot (DOT) are the winds of change. Following a month-long decline that paralleled a more extensive drop in the cryptocurrency market, DOT is now at a crucial point.
Technical signs suggest a positive turnaround, and some analysts project a big price increase for the popular interoperable blockchain. But a recent spending binge by the Polkadot Foundation has raised questions and polarised the community.
Falling Wedge Hints At Breakout, Analysts Eye $9 Target
The enthusiasm of DOT investors wavers as technical analysis paints a potentially optimistic picture. There is a “falling wedge” formation on the daily chart, which traditionally is a positive signal. This pattern indicates a price squeeze between trendlines that are convergent, which frequently results in a strong breakout.
Trader Jonathan Carter has identified $6.50 as the critical resistance level. A clear break above this level would lead to a spike in purchasing activity that would push DOT closer to his estimated profit goals of $7.75 and potentially $9.00.
Polkadot forming falling wedge on daily timeframe💁♂️
Key resistance at $6.5 – need to break for bullish structure☝️
Consider setting profit targets at $7.75 and $9.00 levels🎯 pic.twitter.com/OwPVFaPZyD
— Jonathan Carter (@JohncyCrypto) July 3, 2024
There may be an impending breakthrough, according to the collapsing wedge formation and rising trade volume. A successful break of the $6.50 barrier may indicate a dramatic change in the mood of the market and open the door for a large price hike.
The Relative Strength Index (RSI), which is presently at 48.65, is encouraging. There is still potential for more upward momentum because DOT is neither overbought nor oversold at this neutral level.
Polkadot Foundation’s Spending Spree
But the Polkadot Foundation’s recent spending binge has put some doubt into the optimistic story. The Foundation spent an incredible $87 million earlier this year, leaving a far smaller amount in its coffers.
According to the breakdown, $36.7 million will go towards events and promotion, $15 million for trading platform incentives, and $23 million towards development.Community members disagree with the Foundation’s assertion that these expenditures are essential to increasing network adoption and exposure.
Many note that Polkadot still trails rivals like Ethereum and Solana in important metrics like network activity, developer engagement, and total value locked (TVL) in spite of the large expenditures.
Some community members on the Polkadot forum said that the spending seemed exorbitant, especially in light of the lack of noticeable outcomes. Before the Foundation spends more money on marketing activities, they stated that the blockchain needs to show a higher return on investment.
Will Spending Concerns Spook Investors?
For DOT, the next several days are quite important. A large surge may be in store if the price breaks above $6.50 and the technical signs remain accurate.
Nonetheless, it is impossible to overlook the community’s worries over the Foundation’s spending practices. Should these worries result in a more extensive sell-off, the possible rally may not materialise.
Featured image from Shutterstock, chart from TradingView
