The Polkadot price retreated on Thursday, dropping from a high of $4.67 earlier this week to $4.20, its lowest point since July 16. It remains 37% above its lowest point this year. It has jumped by 22% in the last 30 days, bringing its market capitalization to over $6.7 billion.
The bullish case for Polkadot price
Polkadot is a crypto project started by Gavin Wood, one of the co-founders of Ethereum network. His idea was to launch a fast blockchain project where developers would launch their parachains, which are independent projects.
The Relay Chain or its smart contracts are pivotal in its architecture as it coordinate and secures the entire network. It is a layer-zero network that connects multiple specialized blockchains.
Polkadot has undergone significant changes in the past few months, as developers addressed key challenges that have hindered its mainstream adoption, similar to Ethereum and Solana.
The Polkadot 2.0 process is made up of three key parts: agile coretime, asynchronous backing, and elastic scaling. The asynchronous backing goal was to reduce the speed from 12 seconds to 6 seconds, while agile coretime replaced the long and expensive parachain auction model.
Elastic scaling enables parachains to utilize multiple cores simultaneously, thereby reducing latency and increasing throughput. This is the only stage that has not been implemented so far.
Read more: Polkadot price prediction: here’s why DOT may surge 500% soon
After this, Polkadot will implement the Join-Accumulate Machine (JAM) upgrade that will replace the Relay Chain with a more friendly architecture. Omce upgraded, Polkadot will transform from a blockchain focused on interconnecting parachains into a decentralized platform for running decentralized applications.
There are signs that the Polkadot network is growing, with FIFA Rivals and Hydration becoming fast-growing applications. FIFA Rivals has thousands of players, while Hydration has gained over $300 million in total value locked.
DOT price will also benefit from the proposed changes to reduce its inflation. Gavin Wood has proposed slashing the number of tokens created a year from 500 million to 9 million and eliminating staking rewards. The challenge with its staking rewards is that many recipients of the tokens sell them, creating selling pressure.
Polkadot price technical analysis
The daily chart shows that the DOT price has pulled back in the past few days. It dropped from a high of $4.50 to the current $4.15. The coin retreated after hitting the descending trendline that connects the highest swings since January 31st.
Polkadot price has dropped to the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, it will likely remain in this range in the near term.
A move above the descending trendline that connects the highest swings since January 31st will confirm the bullish breakout and push it to a high of $5.40, the highest swing on May 11. A move above that level will validate the double-bottom pattern and lead to more gains.
The alternative scenario is where the token loses the 50-day and 100-day EMAs. Such a move will see it drop to the double-bottom point at $3.20.
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