- Polkadot (DOT) failed to sustain its breakout, pulling back 12% due to weak demand and liquidity.
- However, renewed interest and FOMO-driven buying could fuel a potential rebound, especially if support levels hold.
Polkadot’s (DOT) recent price action has been a rollercoaster, with the altcoin struggling to maintain momentum after a failed breakout attempt. Despite the overall bullish sentiment in the altcoin market, DOT has failed to capitalize on its mid-week surge, and the question on many traders’ minds is whether FOMO (fear of missing out) could fuel a potential rebound.
The Failed Breakout and Market Sentiment
After several weeks of trading within a wedge pattern, DOT made a promising breakout from a descending resistance line last week. This sparked optimism, as many traders hoped for a stronger rally. Unfortunately, the breakout proved to be short-lived, with DOT experiencing a 12% pullback over the weekend, bringing its price to $6.61. The key takeaway here is that DOT is still trapped within the broader bearish trend it has been following since December, and despite the brief breakout attempt, the altcoin struggled to drum up the necessary demand for sustained upward movement.
What’s Holding DOT Back?
One of the main factors contributing to DOT’s stalled momentum is a lack of strong demand. The altcoin has been struggling with insufficient liquidity to push the price higher. This was clearly visible when the price pulled back despite the initial breakout attempt. Additionally, active addresses on the Polkadot network dropped to a three-month low of 5,154 addresses on January 11, only to recover to 8,038 addresses by January 17. This uptick in address activity is promising, but the number still pales in comparison to other altcoins that have seen higher levels of engagement in recent weeks.
While the surge in new addresses (from 1,459 to 2,069 in just two days) suggests renewed interest, it hasn’t been enough to propel DOT back into a bullish phase. As of now, the altcoin’s price remains anchored below its resistance levels, and there is a question of whether traders are simply waiting for a more favorable entry point.
FOMO to the Rescue?
Despite the recent pullback, there are reasons to believe that DOT could stage a recovery, thanks to a potential influx of FOMO-driven interest. As the broader altcoin market sees renewed excitement and liquidity flows, DOT could benefit from traders looking for discounted entry points. The price dip below the $7 range has positioned DOT as an attractive option for those looking to buy near support, but much will depend on whether the altcoin can capture the attention of more investors.
Recent data suggests that traders are still focused on short-term gains, as evidenced by over $10 million worth of spot outflows in the past 48 hours. However, with relatively low long positions being liquidated (just below $3 million), DOT could see a shift toward accumulation if price action improves.
While DOT’s price has struggled recently, there are signs that the altcoin could make another attempt at a breakout if the market sentiment remains positive. If FOMO kicks in and more buyers step in, DOT could have the momentum it needs to recover from its recent setback. Traders will be closely watching the next few days to see if DOT can turn this period of uncertainty into an opportunity for growth.
