Polkadot is rising again after slowing down on its earlier rally in January. The token is trading at $6.97, representing an increase of 5.98% in 24 hours. The token’s price has been in this range since January 20, 2023, with small increments in daily intervals.
Also, Polkadot had 20 green days in the last 30 days and a price volatility of 12.11% within the same timeframe.
What Is Behind The Recent Gains?
Gavin Wood, the founder of Polkadot, announced on Twitter that after 15 months of development, the network’s XCM version 3 is merged. This upgrade will satisfy the network’s vision to create bridges, cross-chain locking, exchanges, and NFTs.
Related Reading: Polygon Beefs Up Layer 2 Position, Gets The Edge In NFT Transactions Vs. Ethereum
Polkadot has rolled out upgrades on its network for the new year. In its Referendum 100 event, there is a proposal to enable pre-checking run-time upgrades on parachains. So far, the proposal is close to a unanimous decision in the community. DOT tokens were used to carry out the voting process as users sought to improve the network.
Secondly, DOT’s recent price surge may be due to its correlation to the price of Bitcoin. Since Bitcoin returned to the $23,000 level, the crypto market has recorded a more positive outlook. But despite this price increase, in-depth analysis is necessary to predict the direction of the asset.
Polkadot Technical Analysis: Will It Sustain The Rally?
Polkadot is trading in the green today and is on a four-day streak of positive price form on the charts. The token is trading above its 50-day Simple Moving Average (SMA), showing bullish pressure in the market. Also, it has broken above its 200-day SMA, expressing a long-term bullish sentiment.
The trading volume has increased by 39.28%% in 24 hours at $454 million. This surge in trading activity has helped boost the asset’s price as the bulls seek to continue their rally. The support levels are $6.02, $6.24, and $6.39. The resistance levels are $6.76, $6.98, and $7.13. DOT has broken past the first resistance level of $6.76 and 6.98 and will likely test the next resistance level in the coming days.
The Relative Strength Index (RSI) is at 66.66, close to the buy zone on the chart. The indicator points upwards and might break out of its channel if the bulls sustain the pressure. The Moving Average Convergence/Divergence (MACD) is below its signal line and showing convergence which is a bearish sentiment. It reflects the possibility of the bears forcing the price below the $6.76 resistance level.
DOT will likely rally to $7 in the coming days if the bulls are mounting enough pressure to surpass its resistance points. But note that altcoins are volatile and can deviate from past price behavior, losing up to half their value. If such events occur, it becomes challenging for the coin to rally back to its previous value due to the speculative nature of the crypto market.
Featured image from Pixabay and chart from TradingView.com