Polkadot price rallies 5% on Tuesday, while risk builds Bitcoin rally provides wrong-footed sense of safety

Polkadot (DOT) price is slicing through the bears' territory as a knife through butter this Tuesday. Altcoins are trading higher as big brother Bitcoin is trading another profitable day with an over 8% gain on the books. Bitcoin and its siblings are trading higher as investors formed the assumption that the Fed will bail out any crypto collapse as they bailed out a US bank with big ties to cryptocurrencies.

Polkadot traders need to ask themselves if this rally is sustainable 

Polkadot price is trading another nudge higher deep into the overbought area. The rally gets underway as Bitcoin jumps another 8% this Tuesday. Investors and crypto participants have retained the feeling that the Fed will bail them out as the Fed already bailed out a crypto-sensitive bank over the weekend and made whole on all deposits.

DOT investors must question themselves if the Fed and the US Treasury will do this for each and every regional bank with ties to cryptocurrencies. It gives them a false sense of safety and might soon see reality kick in with DOT set to drop back below $6.23 and to $5.74. It would mean that bulls who are jumping in now at this pop above $6.23 are carrying a very big risk of a bull squeeze with  more than 11% of losses at hand.

DOT/USD  4H-chart    

Should markets keep supporting this sense of safety and should the situation remain contained to just Silicon Valley Bank and New York Signature Bank, expect to see the tail risk diminish. Price action has the opportunity here to trade higher. That would mean another 25% higher revaluation for DOT and see it around $7.80. From there some profit-taking would happen and could see a fade in search of support around $7.60 with the monthly R1 resistance overturned into support.