New Delhi (CoinChapter.com) — DOT, the native token of the Polkadot Network, crashed by 15% in the last 24 hours.
The Chart Forecast
Polkadot prices have dropped by 30.5% in the last 5 days. As the chart shows, DOT price patterns create a bearish pennant. A pennant is a continuation pattern in which a breakout or breakdown follows a consolidation period. In structure, they look similar to flags and triangles, which are other examples of continuation patterns.
A bearish pennant is created due to a conflict between positive and negative market sentiments. Negative sentiment causes the prices to plummet. When the sellers, who earlier pushed the price down, retreat and take profits, the market consolidates for a brief period. However, without enough bullish tailwinds to recover completely, the prices drop again. As the market moves below the support line, sellers resume their trading. This leads to a further drop in prices.
A decline in volume is also an indicator of bearish pennant formation. DOT’s volume has been on a steady decline since May 20.
The formation of a bearish pennant can create a selling mentality for Polkadot. As prices fall, traders can panic and sell their DOT tokens to recuperate any further losses. As a result, prices may sink even more.
Investors lost a devastating $830 billion in the May 19 crypto-market collapse. The crash was the aftermath of two developments. First was Tesla’s announcement that it would not accept bitcoin as payment for its cars. The second was China’s crackdown on crypto mining operations. As a result, Bitcoin’s fall snowballed into a market crash as other cryptocurrencies followed suit.
Most cryptos saw a decline of about 50% in their prices, and the combined market cap loss was about $1 trillion.
What Future Holds
Polkadot prices fell by 64.49% on the day of the crash. Since then, they rose by almost 85% till June 3. DOT has nearly 400 projects on its network. Polkadot and its canary network Kusama(KSM) recently made the news when a blockchain-focused venture capital firm, Master Ventures, launched a $30 million VC fund called Master Ventures Polkadot VC fund.
The funding will invite more projects on the Polkadot and Kusama networks, which are on track to launch over 50 parachains by 2022. Parachains are specialized Layer-1 blockchains with a specific function. To bid for a Parachain slot, developers will need to use Polkadot and Kusama’s native tokens, DOT and KSM, respectively. These tokens will then be locked out for the duration of the slot.
Polkadot and Kusama creator Gavin Wood today published a tentative schedule for Kusama Parachain auctions. As per the announcement, the first auction will take place on June 15 at 12:00 GMT, and the winner will be announced on June 22. For now, the announcement mentions the dates for 5 auctions only, spaced a week apart.
The Kusama Council is yet to approve the schedule for these auctions.
Both the announcement and auction may create the bullish winds that Polkadot needs to sail out of these bearish waters. Traders may even start buying this dip to make use of the fallen prices, which will probably boost prices and help in DOT’s recovery. Polkadot has the fundamentals to recover from its current situation.