Polkadot (DOT) price dropped in 2022 as the crypto market faced many challenges. A little over a year ago, the DOT price hit an all-time high of around $56, but the coin is now trading at $4.35.
In the last 24 hours, the price of this cryptocurrency has fallen another 3.70%. Their market capitalization is currently around $5 billion, peaking at over $30 billion.
Parachain Concerns Remain
Polkadot is a leading crypto project which is relatively different from other blockchain networks like Tron and Ethereum. It allows developers to create so-called parachains. Unlike subordinate Layer 2 solutions, these are independent heterogeneous blockchains that run in parallel and are connected to each other via the relay chain.
A parachain can be used for various purposes. For example, a platform like Efinity deals with non-fungible tokens, while Phala Network is a decentralized cloud computing network. Other popular parachains include Litentry, Moonbeam, Acala, and Clover Finance.
Polkadot price reacted to the relatively poor performance of these networks. For example, smart contract parachains like Moonbeam and Moonriver have a total deposit value of $101 million and $51 million, respectively.
Perhaps the biggest disappointment of Polkadot parachains was liquidity provider Acala Network. It is best known for its Acala Dollar, a decentralized stablecoin. Like Terra USD, the stablecoin lost its peg to the US dollar in 2022 and never regained it. This stablecoin was backed by digital assets such as DOT, KSM, ACA, and BTC. As their prices fell, stablecoins in circulation were discovered.
Other polka dot parachains weren’t very active either. For example, Enjin’s Efinity had little market activity in 2022 as the non-fungible token (NFT) boom waned. Other less successful parachains have included Litentry, Darwinia, Frequency, and HydraDX.
Other factors are also contributing to the lower DOT price. Like other cryptocurrencies, Polkadot is suffering from macroeconomic factors such as rising interest rates, investor anxiety, and fears of a possible recession. The collapse of crypto exchange FTX and other crypto projects has also had a negative impact on Polkadot.
Polkadot Price Prediction
The price chart shows that the DOT price has undergone a strong sell-off over the past few months. The price decline culminated with the coin falling below $10.35, its lowest level on July 11 of last year. The price also fell below the 25- and 50-day moving average lines, which is a bearish sign. The MACD broke below the neutral point, while the Average True Range (ATR) declined.
Therefore, the polka dot price should continue to decline as sellers target the next key support at $3.50. A move above the resistance at $10.3 would invalidate the bearish view.
In this guide, we explain how to buy or short sell Polkadot.