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Polkadot Price Forecast: Will DOT Reach the $5 Level Soon?
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Polkadot Price Forecast: Will DOT Reach the $5 Level Soon?

  • Polkadot (DOT) price is holding above the critical support of $6.3, which will cause it to tumble to multi-month lows.
  • The Sharpe Ratio is negative, at the lowest point in seven months, suggesting DOT will have trouble attracting investors.
  • Open Interest has declined by $154 million in six days, substantiating the bearishness.

Polkadot (DOT) price has exhibited resilience in the past few days, preventing further decline, but this will likely change.

The bearishness amplified during the recent decline will likely pull the altcoin down to test $5 as support.

Polkadot Finds It Difficult to Attract Investors

The recovery of Polkadot’s price would be much quicker with the support of DOT holders and potential investors. 

Generally, the addition of new investors and an increase in participation tend to trigger an upswing.

This requires the asset to be a profitable, attractive investment option, which DOT seems not to be currently. 

The Sharpe Ratio evinces this, given it is currently at -5.17. The Sharpe ratio measures the risk-adjusted return of an investment or portfolio. It provides insight into the efficiency of an investment strategy.

Negative figures indicate a lack of solid risk returns, which keeps investors away from the digital asset. Given that DOT’s Sharpe Ratio is at a seven-month low, Polkadot’s price will find some difficulty recovering.

See Also: Bitcoin Price Prediction As BTC Bounces From $60,000 Level – More Selling Incoming?

But beyond attracting new investors, retaining the interest of the present DOT holders is much more crucial. Polkadot is also losing in this regard since traders are pulling their money out of the Futures market.

DOT Price Chart | Source: Coinstats

 

This increases the potential for a decline in Polkadot’s price.

Polkadot’s price trading at $6.544 at the time of writing has corrected massively after invalidating the falling wedge. 

The altcoin is still vulnerable to additional decline since the market cues do not favor DOT.

If the support at $6.3 is breached, Polkadot’s price may decline further to $5.7. 

A drop to this level would represent a four-month low in price, potentially establishing it as a market bottom for 2024.

Disclaimer: The information provided is not trading advice. Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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