Polkadot price could plummet below $6 despite a successful year for DOT’s parachains

Polkadot, multichain for web3, is celebrating a year of parachains, blockchains connected to the DOT ecosystem. DOT price plummeted nearly 10% since February 9, analysts predict further decline in the web3 protocol’s native token. 

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Polkadot smart chain celebrates a year of parallel blockchains in its ecosystem

Polkadot is an Ethereum competitor and an ecosystem of smart contract parachains, parallel blockchains in the DOT ecosystem. 

The top parachains, Moonbeam Network, Astar Network and Acala Network, won the first three auctions and drove a broad range of cross-chain, interoperable web3 integrations. 

Several projects in the DeFi ecosystem emerged winners in Polkadot’s auctions, running parallel blockchains alongside DOT’s native chain. 

Despite bullish developments in its ecosystem and powering multiple DeFi and smart contract blockchain projects, DOT price is struggling to recoup its losses. DOT price yielded 8.7% losses since February 9. 

DOT price is at risk of collapse below the $6 level

DOT, the native token of the Polkadot ecosystem wiped its weekly gains with the recent decline to $6.26. The token is currently trading at its weekly low and DOT price is at risk of decline below the $6 level. 

On the 1D timeframe, DOT is in a multi-month downtrend, on the 4H chart, it is in an uptrend in an ascending channel. 

The chart below shows the formation of a support zone between $6.22 and $6.59. DOT declined below the lower trendline forming the support zone and nosedived below the volume point-of-control (POC) at $6.22. 

The Volume POC is a key level as it represents the price with the most liquidity and highest traded volume over a specific period of time. Polkadot price declined below two Exponential Moving Averages (EMAs) the 10-day and 50-day represented by red and blue lines on the chart below. 

The 200-day EMA is acting as support for the token at $6.15. A close below the lower trendline forming the ascending channel could confirm a trend reversal and the downside targets are the 38.2% Fibonacci retracement at $6.03 and the 50% Fibonacci retracement at $5.70. 

DOT/USDT price chart 

There is a likelihood of a rebound from the lower trendline of the ascending channel, DOT price could enter the support zone between $6.22 and $6.59. 

Relative Strength Index, a momentum indicator reads 35.46. RSI is well below the neutral level of 50 and it is important to note that the indicator reveals a bearish divergence. RSI has dropped to 35.46 for the first time since the first week of February and this has occurred only three times in 2023. 

Polkadot’s short-term uptrend lacks the underlying strength and further downside correction is likely in DOT price.