Polkadot (DOT) Price Prediction: Will History Repeat Itself as DOT Retests Critical Support at $8.60?

Polkadot [DOT] has successfully closed above the critical $8.60 resistance on the weekly chart. This level has historically played a pivotal role

Cryptocurrency price analysis platform Rekt Capital has highlighted a crucial level of support for Polkadot [DOT] that could determine its next price direction.

According to Rekt Capital, DOT’s price action at this level has historically influenced the cryptocurrency’s price trajectory.

The analysis showed that a successful retest of this level could lead to significant gains for DOT, whereas a failure to hold this support could result in further price declines.

At press time, Polkadot was trading at $8.86, with a 4.24% gain in the last 24 hours and a 16.97% rise over the past seven days.

The cryptocurrency had a 24-hour trading volume of $1.03 billion, and a circulating supply of 1.5 billion, giving it a market capitalization of $13.48 billion, according to CoinMarketCap.

The analysis highlighted that in 2021, a similar retest of this level led to a rally to new all-time highs above $50.

However, earlier in 2023, DOT failed to hold this support, leading to a steep decline to its yearly low of $4.15.

This level has historically played a pivotal role in determining DOT’s price trajectory.

Should the retest succeed, we can expect DOT to aim for the next major resistance at $12.61.

From its current position, this marks a potential 101.53% gain, based on historical price behavior.

However, if $8.60 fails to hold, traders could see the price revisit lower levels, including the $4.15 support.

Relative Strength Index (RSI) and Open Interest (OI) metrics also indicated bullish momentum for Polkadot.

The RSI was positioned in overbought territory, indicating strong demand for the cryptocurrency.

Meanwhile, the OI showed a rise and was positively correlated with the price movement, further suggesting trader preference for long positions.

OI had a minimal 8.74% increase to $499.25 million, while the 24-hour trading volume showed a moderate rise of 22.03% to $915.97 million.

Additionally, the OI-Weighted Funding Rate for DOT remained positive since mid-November, reflecting strong demand for long positions.

Spikes in funding rates on the 12th and 18th of November indicated heightened bullish sentiment. This aligns with the ongoing breakout above $8.60.

On-chain activity showed mixed signals for Polkadot.

According to DefiLlama, the Total Value Locked (TVL) in Polkadot stood at $55.89 million, with a 24-hour decrease of 27.44%.

The network’s stablecoin market capitalization was $89.13 million.

Despite the TVL decline, the positive funding rates and rising open interest suggested traders were positioning for further upside.

Technically, Polkadot recently broke out of a bullish falling wedge pattern, which often precedes upward momentum.

This breakout aligns with the move above $8.60, reinforcing optimism among traders.

Market participants are now watching the monthly close, which could strengthen the breakout if it holds above $8.60.