Polkadot Under Fire: 20% Price Drop Follows $87 Million Spending Outrage
The winds of change are swirling around Polkadot (DOT). After a month-long slump that mirrored a broader cryptocurrency market downturn, DOT finds itself at a critical juncture.
Technical indicators hint at a bullish reversal, with some analysts predicting a significant price surge for the interoperable blockchain darling. However, a recent spending spree by the Polkadot Foundation has cast a shadow of doubt, leaving the community divided.
Falling Wedge Hints At Breakout, Analysts Eye $9 Target
As technical analysis presents a potentially hopeful picture, DOT holders hope wavers. On the daily chart, a falling wedge patternhistorically a bullish indicationhas been observed. This pattern suggests a price squeeze between converging trendlines, often culminating in a sharp breakout.
Renowned analyst Jonathan Carter pinpoints $6.50 as the key resistance level. A decisive break above this point could trigger a surge in buying pressure, propelling DOT towards his projected profit targets of $7.75 and even $9.00.
Polkadot forming falling wedge on daily timeframe
Key resistance at $6.5 need to break for bullish structure
Consider setting profit targets at $7.75 and $9.00 levels pic.twitter.com/OwPVFaPZyD
Jonathan Carter (@JohncyCrypto) July 3, 2024
The falling wedge pattern and increasing trading volume suggest a potential breakout is imminent. A successful breach of the $6.50 resistance could signal a significant shift in market sentiment, paving the way for a substantial price increase.
Buoying this optimism is the Relative Strength Index (RSI), currently hovering around 48.65. This neutral level indicates that DOT is neither overbought nor oversold, leaving room for further upward momentum.
Polkadot Foundations Spending Spree
However, a recent spending spree by the Polkadot Foundation has injected a dose of skepticism into the bullish narrative. Earlier this year, the Foundation burned through a staggering $87 million, leaving its coffers with a significantly reduced balance.
The breakdown reveals $36.7 million allocated for advertising and events, $15 million for trading platform incentives, and $23 million for development. While the Foundation maintains these investments are crucial for boosting network visibility and adoption, community members are not convinced.
Many point out that despite the hefty spending, Polkadot continues to lag behind competitors like Ethereum and Solana in key metrics like network activity, developer engagement, and total value locked (TVL).
The spending seems excessive, especially considering the lack of tangible results, some community members on the Polkadot forum said. The blockchain needs to see a better return on investment before the Foundation throws more money at marketing campaigns, they said.
Will Spending Concerns Spook Investors?The coming days will be crucial for DOT. If the technical indicators hold true and the price breaks above $6.50, a significant rally could be in the cards.
However, the communitys concerns about the Foundations spending habits cannot be ignored. If these concerns translate into a broader sell-off, the potential breakout might fizzle.
Featured image from Shutterstock, chart from TradingView
Read more: https://www.newsbtc.com/news/polkadot-under-fire-20-price-drop-follows-87-million-spending-outrage/
Text source: NewsBTC
