Polkadot price remained under pressure this week as the recent momentum faded. The DOT token dropped to $6.70 on Wednesday, down by about 42% below the highest level in December. Here are the three top reasons why the DOT price may have a strong bullish breakout.
Polkadot stablecoins and ecosystem growth
The first main reason why the DOT price has more room to rise is that the ecosystem is growing. One of the best measures of this growth is the amount of stablecoins in the Polkadot network.
Data shows that the amount of USD Coin and Tether in the ecosystem has jumped to a record high of $114 million. Most of these coins are in parachains like AssetHub, Hydration, and Moonbeam. While these numbers are smaller than in other chain, they are moving in the right direction.
Polkadot also hopes to continue innovating, a move that will make it a better chain for developers. Some of the most important upcoming features are solidity contracts on assethub, the ability to run Ethereum virtual machine on Polkadot, elastic scaling, and the use of the DOT token to pay for gas across all chains.
Potential DOT ETF approval
The other reason why the Polkadot price will continue rising is that the Securities and Exchange Commission (SEC) may approve a spot DOT ETF. While no company has filed for a spot Polkadot ETF, there is a likelihood that they will be filed.
A DOT ETF may be approved because of its size since it has a market cap of over $10.4 billion and is one of the most popular chains in crypto. It was also started by Gavin Wood, one of the co-founders of Ethereum. A Polkadot ETF would likely lead to more inflows and hype, leading to a higher price.
Polkadot price has bullish technicals
Meanwhile, Polkadot token has formed the bullish falling wedge pattern and is now sitting at the 61.8% Fibonacci Retracement point. The wedge has been forming since November last year and is one of the most bullish patterns.
There are signs that the DOT price is forming a bullish divergence as the MACD and the Percentage Price Oscillator (PPO) have pointed upwards. Therefore, the coin will likely have a strong bullish breakout, with the target being at $11.65, the highest swing on December 4, which is about 71% above the current level.
