The winds of change are swirling around Polkadot (DOT). After a month of declines that signaled a decline in the broader cryptocurrency market, DOT finds itself in a critical position.
Technical indicators are pointing to a bullish reversal, with some analysts predicting a significant price increase for the blockchain partner. However, the Polkadot Foundation’s recent spending has raised doubts, leaving the community divided.
Fall Tips On Pop Up, Eye Analysts $9 Target
As the technical analysis paints a more optimistic picture, DOT management’s optimism is wavering. On the daily chart, a “falling wedge” pattern—historically a bullish indicator—has been observed. This pattern suggests price congestion between dynamic trend lines, often culminating in a sharp breakout.
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Popular analyst Jonathan Carter identifies $6.50 as a key resistance level. A decisive break above this point could result in increased buying pressure, pushing DOT to its profit target of $7.75 and even $9.00.
Polkadot makes a falling wedge on a daily basis💁♂️
Key resistance at $6.5 – need to break to get a bullish formation☝️
Consider setting profit targets at $7.75 and at the $9.00 level🎯 pic.twitter.com/OwPVFaPZyD
– Jonathan Carter (@JohncyCrypto) July 3, 2024
A falling wedge pattern and increased trading volume suggest a possible breakout is imminent. A successful breach of the $6.50 resistance could signal a major change in market sentiment, paving the way for a major upside move.
Adding to this optimism is the Relative Strength Index (RSI), which is currently hovering around 48.65. This neutral rating indicates that DOT is neither overbought nor oversold, leaving room for further upside.
The Polkadot Foundation’s Spending Spree
However, Polkadot Foundation’s recent spending has thrown a dose of doubt into the bullish narrative. Earlier this year, the Foundation burned a staggering $87 million, leaving its fund with a significantly depleted balance.
The breakdown revealed $36.7 million was earmarked for advertising and events, $15 million for platform-promoted marketing, and $23 million for development. While the Foundation maintains this investment is important to improve the network’s visibility and acceptance, community members are not convinced.
Many point out that despite spending a lot of money, Polkadot continues to lag behind competitors like Ethereum and Solana in key metrics like network activity, developer engagement, and total value locked (TVL).
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The spending seems excessive, especially given the lack of tangible results, said some community members on the Polkadot forum. Blockchain needs to see a better return on investment before the Foundation throws more money at marketing campaigns, they said.
Does Leverage Worry Investors?
The coming days will be important for DOT. If the technical indicators hold true and the price breaks above $6.50, a significant rally could be on the cards.
However, public concerns about the Foundation’s spending practices cannot be ignored. If these concerns translate into broader sales, the potential breakout could be disruptive.
Featured image from Shutterstock, chart from TradingView
