Cryptocurrency markets continue to disappoint this week as risk-on investor sentiment remains uncertain ahead of the release of the US inflation report for July.
The price also came under pressure and fell about 3% in the last 24 hours to $4.45.
Despite the drop, the altcoin is up around 6% over the past week, a marked improvement after falling to as low as $3.6 earlier this month.
Optimism surrounds future prospects
In the longer term, investors remain positive about DOT’s prospects.
Many still believe that the Polkadot blockchain ecosystem will play a key role in the Web3 technology revolution, which aims to decentralize the web and empower creators and consumers, as well as move away from centralized control by major social media platforms.
Investors are also excited about the proposed JAM upgrade, introduced by Polkadot founder Gavin Wood. This project will replace the current central relay chain with a more advanced, versatile JAM network that promises increased security and effective inter-network communication.
While JAM is still in development and unlikely to be released before 2025, its potential to raise performance is expected to support DOT price increases over time.
DOT/USD Technical Analysis
For perspective, Polkadot peaked at $54 in the fall of 2021, just before the global inflation crisis hit. Over the four-year period, Polkadot has averaged around $13, which is more than 190% higher than current levels.
The recent correction has pushed DOT price towards $3.50 which is a huge horizontal support that will provide plenty of support. A sustained rebound from this support zone could see a move towards the next major resistance block which is located around $6-7.
More importantly, the bounce from this significant zone has created the potential for a double bottom formation. This bullish pattern could be activated if price action breaks through the neckline, which is just below the $12 handle.
In this case, Polkadot price is likely to continue to rise and eventually reach the $20 zone, which would signal the completion of the double bottom formation. However, this bullish development is dependent on a more favorable risk sentiment.
