The price of Polkadot (DOT) is showing significant growth this month, with both technical and fundamental factors indicating a possible sharp rise in the coming months.
Growth of Polkadot Ecosystem
The Polkadot ecosystem continues to expand, making it a key factor for a potential price rise of DOT in the short term. For instance, Mythos Chain, a parachain in the ecosystem, has become one of the major players in the non-fungible token (NFT) industry. In the past month, the network processed NFT transactions worth over $37 million, making it the fourth-largest chain after Ethereum, Polygon, and Bitcoin.
Another significant player, Hydration, is gaining traction, with the total value locked in the ecosystem climbing to $248 million, up from $53 million in June.
Additionally, the recently launched game FIFA Rivals has attracted attention from thousands of users. The growth of the Polkadot ecosystem may accelerate following the conclusion of the parachain auction process as part of the Polkadot 2.0 upgrade.
Inflation Reduction for DOT
One reason for the recent decline in DOT's price is its high inflation. The network mints over 500 million DOT tokens annually, often leading to sales by validators and stakers. Polkadot's founder Gavin Wood has proposed reducing this issuance to 90 million tokens per year. Wood also plans to replace payments to validators with a technology called Proof of Personhood (PoP), granting each token holder voting rights.
Wood aims for this shift to pave the way for fairer governance, spam-resistant voting, and reduced reliance on capital power.
Technical Analysis of Polkadot Prices
The price of DOT has sharply declined over the past few years, bottoming at $3 in June. On the daily time frame, it has formed a double-bottom pattern, a common bullish reversal signal. The current resistance level is at $5.40, which is over 20% higher than the current level.
Furthermore, it has moved above both the 50-day and 100-day Exponential Moving Averages, indicating a bullish momentum is building up. Leading oscillators such as the Relative Strength Index and MACD are also showing an upward direction. Thus, it is expected that the token will continue rising, with the next level to watch at $7.36, a 66% gain from current levels. A drop below the support at $3.50 would invalidate the bullish outlook.
Given the ongoing expansion of the Polkadot ecosystem, proposals to reduce inflation, and positive technical signals, the price of DOT may continue to rise in the foreseeable future.
