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Polkadot Price In A 30% Downtrend Despite Strong Fundamentals — Can This Divergence Mean DOT is Undervalued?

Last Updated April 11, 2024 3:14 PM
Nikola Lazic
Last Updated April 11, 2024 3:14 PM

Key Takeaways

  • DOT’s price fell 30% since March 13, signaling a downtrend.
  • User growth surges with record-high wallets and unique accounts.
  • The current bearish price trend may precede a major run-up.

The price of Polkadot’s token DOT has been in a downtrend since March 13, when it peaked at $12. It reached its lowest point today, slightly above $8, and declined by 30%. 

However, by looking at its fundamentals, Polakadot has been onboarding new users at a high pace, according to its Parity Data dashboard . Although the network activity is lower than in the previous months, onboarding new users makes a case for its adoption. 

Polkadot Fundamentals 

Polkadot is witnessing a spike in new users. March saw a record high in active wallets, exceeding 600,000, and unique accounts, topping 5.59 million, highlighting increasing platform interest. This surge is likely influenced by Polkadot’s developer-friendly parachains, with Moonbeam leading in active addresses.

Number of accounts active

Despite the user influx, Polkadot’s transaction volume has yet to mirror this growth, staying significantly lower than its peak of 31,7 million in December. This difference prompts questions about the depth of user engagement, with speculation that many may be holding or staking DOT tokens rather than actively using them for transactions.

DOT transactions

This is a bullish sign for the price of DOT as investors are passively stacking up on the token. 

DOT Price Analysis 

The price of DOT started its last major uptrend on October 19 after establishing a bottom around $3.60. Since then, it rose to $12 on March 14, an increase of 233%. This was likely its first five-wave impulse in the more significant starting bull phase signaled at a breakout above its $6 resistance zone. 

Daily chart

As the price made a downturn to its ascending support, it is now retesting it slightly above $8, but as it now looks, a breakout to the downside is in progress. If our count is correct and we saw the completion of the five-wave impulse on March 14, this downturn is its first bull market correction, likely an ABC one. 


Usually, these corrections are deeper and come to 0.5 or optimally on the 0.618 Fibonacci retracement level. The daily chart RSI and MACD point out more downside room, and with what wave structure implies, DOT is now heading for a lower low. 

Our first target would be $7.70, while its next is $6.80. However, after this correction ends, DOT could be ready for another major run-up as its higher degree wave 3 should start. This means that while the outlook for DOT remains bearish in the near term, there are some indications of a much larger rise after this period ends.  

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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