Polkadot Makes U-turn Indicating Potential For Upside

The price action for Polkadot (DOT) showed a sharp reversal, which can be characterized as a classic “V-bottom” pattern. This usually occurs at key price zones, this case, $4.80.

Initially, the price dropped sharply from a high of $5.147 around 12:30, descending to a low of $4.758 by 13:30.

This rapid descent reflected a strong bearish sentiment during the early trading session.

After reaching the bottom, DOT experienced a steady recovery. It was followed by a sudden sharp increase, culminating at $5.17 at the time of writing.

This represented a complete retracement back to its starting high, signaling a potent bullish response.

The sharp rebound after touching the low suggested a strong buying interest at lower levels. That was likely viewed by traders as an attractive entry point.

The U-turn pattern indicated a potential continuation to the upside if the momentum persists.

However, it’s crucial to monitor if DOT can sustain above $5.15. Failing to do so might lead to a double top scenario.

This could push it back down towards the middle of the range around $4.95.

Conversely, a confirmed breakout above $5.147 could set the stage for further gains.

This would challenge the next psychological barrier at $5.200 or higher, dependent on market sentiment and volume.

What to Expect from the Broader Market?

Following this Polkadot potential reversal, discussions have sparked on whether this trend will influence broader market movements.

Analysts are divided on the outcomes. One scenario posits that if DOT’s rally is based on project fundamentals or market sentiment shifts, other cryptocurrencies might follow, indicating a potential market-wide recovery.

However, this isn’t guaranteed; the crypto market often reacts individually to news and developments.

Conversely, if Polkadot‘s U-turn is due to specific project-related news or corrections, the impact might be isolated.

Therefore, while DOT’s performance could signal a market trend, investors should remain cautious, as each cryptocurrency’s reaction can vary based on its unique drivers and community response.

Polkadot Spot Inflow/Outflow Ratio

However, DOT Spot Inflow/Outflow revealed a notable shift in market dynamics with the Netflow turning negative at -$2.60M as of 12 February 2025, following three days of positive net inflows.

This recent negative netflow coincides with a price of $5.205. Previously, periods of positive net inflows generally aligned with price stabilizations or increases.

Around early September and late October DOT’s increased inflows supported a recovery, suggesting buying interest that temporarily pushed prices higher.

Conversely, phases of net outflows, particularly visible through late November and December, correlated strongly with declines in Poladot price, indicating selling pressure or profit-taking which subsequently led to a decrease in price levels.

The return to negative netflow might signal a renewed selling pressure or a reduction in buying interest, which could potentially lead to a decrease in DOT’s price if the trend persists.

A continuation of this negative netflow may pressurize prices downward while a reversal back to positive netflows could suggest incoming buying pressure and a possible price increase.