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The Polkadot (DOT/USD) price has struggled in the past few days. It is trading at $21.87, which is 15.8% below the highest level this week. This drop has brought its total market capitalization to more than $20.87 billion, making it the 9th biggest cryptocurrency in the world.
Polkadot and the Fed
Polkadot is a fast-growing blockchain project that is relatively similar to Ethereum. The network helps developers build decentralised applications in areas like Decentralised Finance (DeFi) and non-fungible tokens (NFT). The platform is relatively popular because of its proof-of-stake technology.
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Developers love it because of its speed and the fact that it is relatively cheaper and safer than Ethereum. Also, they are attracted to it for the fact that it was started by one of the co-founders of Ethereum.
Like all cryptocurrencies, the Polkadot price has struggled recently because of the hawkish Federal Reserve decision. In it, the bank left interest rate unchanged and provided hints that it will start tightening in 2023. This statement was relatively different from the past meetings when the Fed maintained a dovish tone. As a result, the US dollar index has surged to the highest level in weeks.
A hawkish Fed and a stronger US dollar are seen as being bad for cryptocurrencies like Bitcoin, Ethereum, and Polkadot. They are also seen as being bad for growth stocks like Okta and CrowdStrike. This is simply because higher rates tend to push investors to relatively safe assets like bonds and dividend stocks.
Meanwhile, Polkadot has struggled even after it was admitted to Coinbase Pro. This admission is usually seen as a positive thing for cryptocurrencies because it leads to more demand. However, some of the recent promotions like Dogecoin, Shiba Inu, and Chiliz have underperformed.
Polkadot price prediction
The daily chart shows that the DOT price has been under pressure in the past few weeks. The coin’s price has dropped by more than 50% from its all-time high. It has also dropped below the 25-day and 50-day exponential moving averages, which is a sign that bears are in control.
Also, it has formed a bearish pennant pattern that is shown in black. Therefore, there is a possibility that the Polkadot price will break out lower in the near term. If this happens, the next key level to watch will be the support at $13.88, which is about 35% below the current level.
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