After a depressing market, cryptocurrencies are turning up again. On Wednesday, Polkadot (DOT/USD) posted a 7% gain and was back to its resistance at $6.48. Polkadot was one of many tokens to record gains. Ethereum was easily the top gainer coin among the top cryptocurrencies, adding 14% in the day. Bitcoin was up 7% on the same day.
The Wednesday gains were a testament that crypto investors are still active. No notable developments were driving the surge. Instead, the cryptocurrencies were building on their previous developments to make a comeback. Ethereum’s substantial gains were largely a result of its Proof-of-Stake shift, which has been less influential in pricing to date.
For Polkadot, we know that the blockchain has been positioning itself to become the smart contract platform of choice. In particular, Polkadot’s parachains have been touted as a key to blockchains’ interoperability. During the Token2049 conference in September 2022, Parity Technologies CMA Peter Ruchatz shared thoughts on Parachains. He said, in reference to the Polkadot parachains, that blockchains will grow through interoperable systems.
Fast forward, Ethereum’s POS shift happened in September. Ruchatz explains that several blockchain participants are considering connecting to Ethereum via Polkadot. Potentially, Polkadot and its native token DOT will benefit from the Ethereum Merge.
DOT recovers to or slightly above the $6.48 resistance
Source – TradingView
Technically, DOT has overcome a short-term descending trendline. The price pumped but has met resistance at $6.48. The resistance coincides with the 50-day MA. DOT has never recovered above the 50-day MA since mid-August.
Should you buy DOT?
There is no doubt about the long-term bull case for DOT. The blockchain is attracting praise due to its ability to enable blockchain communication. Thus, any value investor would consider DOT attractive, given its low prices from the previous highs.
The litmus test for DOT now shifts to whether the cryptocurrency will successfully clear $6.8. Don’t get it wrong, the cryptocurrency trades at $6.51, but the price cannot be recognised as a breakout yet. We need to see a bull candlestick closing higher to make a bull call.