Crypto

When Will Polkadot Break $6?

Shivaganesh

Will DOT tokens surge past $6? insights on key resistance and market trends

Polkadot (DOT) has mirrored the broader crypto market rally, recently breaking out of a prolonged four-month downtrend. Post-election optimism briefly pushed DOT near $6, but a subsequent three-day pullback brought prices down to $4.75, with intraday losses approaching 7%. However, as seen often in crypto markets, each dip presents an opportunity for investors to establish new support levels and push prices higher.

Currently trading at $5.64, Polkadot shows signs of recovery. If the current momentum is maintained, DOT could break through the $6 resistance level, with $7 as the next potential target.

Consolidation needed for DOT to break above $6

Interestingly, DOT's near $6 peak occurred when the daily chart was overbought according to the RSI, which means the situation was getting overheated. That scenario panicked traders who expected correction and pushed out from the cycle before it occurred.

Generally speaking, a breakout without enough buyers' pressure would only make way for a pullback. Conversely, a consolidation process where both sides of the scale are relatively balanced normally precedes a breakout.

On the daily chart of DOT, a pullback brought the price down to almost $4.775. However, two large green candles in the following days, each recording a higher high, seem to suggest that bulls used the opportunity to grab a discount in buying DOT tokens.

Clearly, the bulls do believe in long-term prospects for Polkadot, but this is not good enough to confirm a clear breakout. For the breakout to occur, the bulls should be able to keep the price above $5, which may initiate a consolidation trend.

The reason is clear: when considering the overall market performance of other coins, Polkadot still lags behind its competitors, many of which have recorded impressive double-digit weekly gains. This volatility leaves DOT vulnerable to sharp swings.

Therefore, the bulls need to keep the present move intact to prevent it from going on a panic selling spree. Steady accumulation will be the key to prevent DOT from reversing back and then stabilize the price and set the bases for sustainable growth in the near future.

$7 may still be too ambitious

While DOT is showing signs of a healthy retracement, a move to $7 may still be premature. The current market sentiment suggests that DOT will likely oscillate within a defined range over the coming days, consolidating its recent gains.

Spot traders appear to be focusing on keeping DOT in a consolidation phase, especially given the broader uncertainty in the crypto market. A move to $7 will likely depend on Bitcoin's ability to break key psychological levels, such as the $93,000 mark.

Interestingly, despite DOT experiencing its highest net outflows in a year at $16.3 million, the price impact has been less severe than expected. Typically, such outflows indicate distribution by large HODLers, which often leads to significant price drops. However, DOT's 7% decline suggests that market participants remain cautiously optimistic.

What Lies Ahead for DOT?

To break above $6, Polkadot will need more significant accumulation from large HODLers, as retail buying alone may not be sufficient. Establishing $5 as a reliable support level will be the first step in stabilizing the price and building momentum.

While $7 remains an ambitious target in the short term, sustained consolidation, coupled with broader market strength, could pave the way for further upward movement. Bitcoin's performance will play a critical role in DOT's trajectory, as a renewed BTC rally above $93,000 could reignite bullish sentiment across the market, attracting institutional and whale investors back to Polkadot.

For now, the focus remains on maintaining the current move, stabilizing prices, and preparing for the next breakout opportunity. DOT's path to $6 and beyond will depend on its ability to withstand market volatility and attract sustained buying interest.