Polkadot Under Fire: 20% Price Drop Follows $87 Million Spending Outrage

Christian Encila

1 year ago

3 mins read

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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.

#DOT

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.

Polkadot is currently trading at $5.39. Chart: TradingView

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

Christian Encila

They say journalists never truly clock out. But for Christian, that's not just a metaphor, it's a lifestyle. By day, he navigates the ever-shifting tides of the cryptocurrency market, wielding words like a seasoned editor and crafting articles that decipher the jargon for the masses. When the PC goes on hibernate mode, however, his pursuits take a more mechanical (and sometimes philosophical) turn.

Christian's journey with the written word began long before the age of Bitcoin. In the hallowed halls of academia, he honed his craft as a feature writer for his college paper. This early love for storytelling paved the way for a successful stint as an editor at a data engineering firm, where his first-month essay win funded a months-long supply of doggie and kitty treats – a testament to his dedication to his furry companions (more on that later).

Christian then roamed the world of journalism, working at newspapers in Canada and even South Korea. He finally settled down at a local news giant in his hometown in the Philippines for a decade, becoming a total news junkie. But then, something new caught his eye: cryptocurrency. It was like a treasure hunt mixed with storytelling - right up his alley!

So, he landed a killer gig at NewsBTC, where he's one of the go-to guys for all things crypto. He breaks down this confusing stuff into bite-sized pieces, making it easy for anyone to understand (he salutes his management team for teaching him this skill).

Think Christian's all work and no play? Not a chance! When he's not at his computer, you'll find him indulging his passion for motorbikes. A true gearhead, Christian loves tinkering with his bike and savoring the joy of the open road on his 320-cc Yamaha R3. Once a speed demon who hit 120mph (a feat he vowed never to repeat), he now prefers leisurely rides along the coast, enjoying the wind in his thinning hair.

Speaking of chill, Christian's got a crew of furry friends waiting for him at home. Two cats and a dog. He swears cats are way smarter than dogs (sorry, Grizzly), but he adores them all anyway. Apparently, watching his pets just chillin’ helps him analyze and write meticulously formatted articles even better.

Here's the thing about this guy: He works a lot, but he keeps himself fueled by enough coffee to make it through the day - and some seriously delicious (Filipino) food. He says a delectable meal is the secret ingredient to a killer article. And after a long day of crypto crusading, he unwinds with some rum (mixed with milk) while watching slapstick movies.

Looking ahead, Christian sees a bright future with NewsBTC. He says he sees himself privileged to be part of an awesome organization, sharing his expertise and passion with a community he values, and fellow editors - and bosses - he deeply respects.

So, the next time you tread into the world of cryptocurrency, remember the man behind the words – the crypto crusader, the grease monkey, and the feline philosopher, all rolled into one.

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