Polkadot (DOT) is about to hit a crucial technical level on Tuesday as it is trading close to the level of $2, which is a crucial level for the coin. As of the time of writing this article, DOT is trading at $1.91 with a loss of more than 7% in the last 24 hours, as per CoinMarketCap.
This recent downturn comes about while DOT is testing an important zone of resistance, with selling momentum increasing in the general market. The volume of transactions for this period has been about $306 million, while the market capitalization for Polkadot has been at about $3.18 billion.
Polkadot Faces Critical Resistance Zone
A well-known crypto analyst, GainMuse, says Polkadot’s current position is a “make-or-break” point. In a latest market update posted on X, the crypto analyst indicated that Polkadot is facing resistance in the region of $2.15-$2.25. If it doesn’t manage to move beyond that, a possible major correction could begin, with the next major level of support being found near $1.65.
According to the analyst, in the short-term, it will depend on whether buyers can retake higher ground in the market in the coming trading sessions, as pointed out.
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Polkadot Ecosystem Shows Growth
However, in spite of the pressures that the tech sector faces in the short term, on-chain fundamentals are more constructive. Another analyst, DeFi Decoder, pointed out that development activity on Polkadot is increasing in 2024. This is a positive sign that developers are interested in the Layer-0 network.
The increased interest among developers is due to the parachain and network upgrade efforts, which are being implemented in order to increase the scalability of the network.
Currently, investors are closely monitoring how DOT closes the month as it helps to establish a future outlook based on the movement of prices close to the resistance level. Despite volatility in prices in the short-term period, it may find support in terms of the development of the ecosystem if market conditions are stable.
However, at this point, the key focus is on Polkadot, and it is currently at a critical stage of its development as a project. On the one hand, some negative trends in technology need to be countered; on the other hand, there are some improvements in technology that are coming together as we close out January.
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