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

2 mins
Updated by Ryan James
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In Brief

  • Polkadot's 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.
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Polakdot (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.

Polkadot Sharpe Ratio.
Polkadot Sharpe Ratio. Source: Messari

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.

Read More: What Is Polkadot (DOT)?

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.

Polkadot Open Interest.
Polkadot Open Interest. Source: Coinglass

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

DOT Price Prediction: Down is Up Next

Polkadot’s price trading at $6.6 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

DOT/USDT 1-day chart.
DOT/USDT 1-day chart. Source: TradingView

Read More: Polkadot (DOT) Price Prediction 2024/2025/2030

However, since the $6.3 support is cemented, it might be difficult to break, and consequently, Polkadot’s price could end up bouncing off it. DOT would thus make its way beyond $7.00 to continue its rally to invalidate the bearish thesis and hit $8.

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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Aaryamann Shrivastava
As a Mass Media (Journalism) graduate, my journey into cryptocurrency journalism has evolved into a distinguished role as an On-Chain Analyst over the past two and a half years. Collaborating with industry-leading media companies like FXStreet, AMBCrypto, and FXEmpire, I’ve delved deeply into the intricate realms of Crypto and Blockchain, crafting over 2,500 meticulously curated SEO-focused articles. Driven by a commitment to excellence, I remain steadfast in delivering the highest caliber...