Polkadot’s DOT Price Drops 16% Despite Increased Staking, Upturn Possible
Why Has the Increase in Staking at Polkadot Not Led to a Rise in DOT Price?
In recent days, the number of staked DOT tokens has increased. However, the price of DOT has fallen by 16%. Some indicators, however, look bullish.
A Look at Staking at Polkadot
Tony, a popular crypto analyst, recently posted a tweet pointing out that Polkadot is increasing the amount of DOT locked in staking. As of January 7, DOT had a total issuance of over 1.3 billion, of which more than 52% were locked in staking.
According to data from Staking Rewards, the number of staked DOT tokens has gained upward momentum in the recent past. At the time of reporting, the total number of staked DOT was 719.81 million, with a reward rate of over 14.8%. Polkadot had a total of nearly 107k staking wallets, with a staking market capitalization of more than $4.8 billion.
Possible Reason for the Increase in Staking Metrics
A possible reason for the increase in staking metrics could be investors’ confidence in DOT, as they hope to earn more rewards in the coming months. Therefore, it seemed important to check the market sentiments around DOT.
Analysis of data from Santiment revealed that the token’s social volume remained relatively high over the past week. However, the bearish sentiment around DOT was dominant, as evidenced by its negative weighted sentiment chart.
DOT Loses Value
The reason for the bearish sentiment around DOT can be attributed to its negative price action. According to CoinMarketCap, DOT had fallen by more than 16% over the past seven days. At the time of writing this article, DOT was trading with a market value of over $8.6 billion.
Our investigation of Polkadot’s liquidation levels revealed that the token experienced a massive sell-off near the $8.8 mark. Shortly thereafter, another wave of selling began near $8.6, leading to a price correction. Since then, several more high liquidation zones have been identified, further pushing down the price of the token.
Outlook Could Improve
Although the data mentioned may seem concerning, things could soon turn in favor of investors. Our analysis of Polkadot’s daily chart suggests that the Chaikin Money Flow (CMF) is showing a slight upward trend. In addition, the Money Flow Index (MFI) is on the verge of entering the oversold zone. This could put buying pressure on DOT and thus drive up the price.
Sources: Staking Rewards, Santiment, CoinMarketCap, TradingView.
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