- An analyst said that DOT might flip a crucial resistance.
- Funding Rate remained positive, suggesting a further price increase.
The price of Polkadot [DOT] has increased by 15.31% on a Year-To-Date (YTD) basis. However, the performance might be termed lackluster compared to other tokens in the top 20 per market cap.
This is because the token has only outperformed a few, like Cardano [ADA] and Ripple [XRP].
However, analyst Michaël van de Poppe thinks things can improve. According to van de Poppe, if sustained, growth in the Polkadot ecosystem might help DOT breakout.
He also added that the optimism around Polkadot 2.0 might fuel the price increase.
Source: X
Is someone buying the rumor?
For those unfamiliar, the project considers Polkadot 2.0 as a protocol that would address the issue many blockchains face. Some of these include security, interoperability, and scalability.
However, the architecture has not been launched yet. But the Polkadot team has said that it would later this year. But what kind of growth has the blockchain experienced that could have driven this confidence?
AMBCrypto was able to identify one, and that was its Total Value Locked (TVL). The TVL is an indicator of a protocol’s health. An increase in the metric indicates a high level of staking and locked assets.
On the other hand, a decrease suggests that participants do not perceive the chain to be trustworthy.
According to data from DeFiLlama, all 11 chains on Polkadot had contributed significantly to the jump in TVL. This indicates a good level of trust in the project.
Source: DeFiLlama
Despite that on-chain data showed that Social Dominance dropped. On the 23rd of March, the Social Dominance of Polkadot increased to 1.086%. But at press time, it had declined to 0.624%.
Boredom before growth?
This decrease is a signal that investors are getting less interested in DOT. Therefore, it is likely that demand for the token might be low.
On a positive note, a decline in the metric might be great to spot buying opportunities.
Typically, traders get more returns if they buy into a project when the hype is low. While this guarantees a good ROI, it might be worth taking a bet on.
Another metric AMBCrypto looked at was the Funding Rate. As of this writing, Polkadot’s Funding Rate was positive. However, the ratio was lower than what it was two weeks back.
Source: Santiment
The positive funding implies that DOT was trading at a premium perp price compared to the spot value. But we can take an inference from the rising price and falling funding.
Read Polkadot’s [DOT] Price Prediction 2024-2025
As the Funding Rate becomes lower and the price increases, it means perp sellers lack credence. It also implies that spot traders are aggressively buying DOT.
If this continues, the price of the token continue to climb in the short term.