Polkadot price continued its strong sell-off on Thursday morning as cryptocurrencies slumped. It has dropped for four consecutive days, reaching its lowest swing since July 5th.
DOT token’s sell-off happened as Bitcoin faced increased resistance at $68,300, and American stocks slumped after mixed earnings by top companies like Alphabet and Tesla.
Polkadot price forms bullish patterns
Still, some analysts believe that the Polkadot token has more upside in the coming days. In an X post, the analyst noted that the token had formed an inverse head-and-shoulders pattern, a popular reversal sign.
He said that DOT would likely retest the support at $5.5 and then bounce back to over $6.5 when this happens.
The inverse H&S is not the only bullish pattern that has formed. On the daily chart below, the DOT token has formed a falling wedge pattern, a popular reversal sign. This pattern happens when an asset has two converging trendlines. In most cases, the bullish breakout occurs when these lines near their convergence.
Polkadot price chart
Polkadot’s fundamentals
Polkadot’s sell-off has coincided with the negative staking flows from the network. Despite its high 11% staking yield, traders have pulled their funds in the past three consecutive days.
According to StakingRewards, the biggest net staking outflow happened on Tuesday when traders withdrew $15 million worth of tokens.
At the same time, unlike other popular blockchains like Solana, Tron, and BNB Chain, Polkadot’s ecosystem growth has been muted over the years. Its ecosystem still lacks major decentralized exchanges (DEX), meme coins, tokenized assets, and non-fungible tokens (NFT).
Polkadot ended one of the biggest hindrances to its ecosystem growth: parachain auctions. In the past, developers working on its blockchain had to go through a prolonged process. They first had to build on Kusama, its canary network, and then move to parachain auctions.
While Polkadot still lags behind other blockchains, several dApps have started to gain market share. For example, Centrifuge has become a big player in the Real World Asset (RWA) tokenization industry. It has tokenized over 1,500 assets, closing its total value to over $294 million.
