Polkadot got off to a good start in 2023, and while the balance sheet remains positive, it has recently suffered a retracement that could take it further back than expected.
It is really a case of saying to the moon and back. Polkadot has gained 50% since the beginning of the year and is now heading back into a bearish spiral, let’s see what it is all about.
Summary
A golden start to 2023 for Polkadot (DOT)
After a run that took it to nearly 8 euros, Polkadot is heading back into a bearish spiral.
From the top above, the currency is heading straight for the 6 Euro resistance, which was surgically reached today.
Today Polkadot is trading at €5.99 down 2.72% in the last 24 hours with a daily trading volume of €218 million.
As of today, Polkadot holds the twelfth position in market capitalization with nearly 7 billion Euro and a circulating supply of 1.162 billion DOT.
At just over €6.50, DOT closed February with +3.8% while in 2023 it gained 50.85% in total.
While 2023 was good, the same cannot be said of last year when the Token brought home a decline of 83.84%.
The new year brought a portentous recovery to Polkadot’s coffers bringing DOT above Litecoin in capitalization and within a step of Solana.
Polkadot and the world of Parachains
Polkadot is an open multichain that facilitates chain-to-chain switching for data, tokens, resources, etc.
The ultimate goal is to enable a decentralized, private, user-controlled web for the creation of dApps and services.
In addition to being a multichain, Polkadot also features parachains with special auctions that fund projects with fixed staking.
Other notable parachains include Astar Netework whose ASTR token, grew 105% in 2023.
Polkadot and Astar have been consistently correlated in market movements except for just over a week in February.
Among the top Parachains we can count Acala (ACA), Moonriver (MOVR), Efinity (EFI), Moonbean (GLMR), Centrifuge (CFG), Astar, and Lientry, although taking out the last three the others have all underperformed Polkadot.
Apart from Polkadot, the market capitalization of the other parachains is marginal so they are not given much consideration.
Analysis of the price of DOT
The price of DOT, after a peak of nearly €8, immediately made a change of direction taking it into a bearish breakout.
However, some analysts are positive for the long term and see DOT targeting €9.50, believing this to be a momentary retracement.
On the daily we can see that once the resistance at Euro 7.70 was broken, DOT started to lose 20% and the trend is continuing.
At this stage of weakness, the token does not seem to be able to resume the uptrend.
The most important support is the one the token is touching today, which is the €6 Euro support, the breaking of which would lead to a further spike.
The support that Polkadot might encounter just below that is between €5.30 and €5.20.
