Polkadot’s price has recently approached oversold territory, leading to speculation among market participants about a potential recovery. Despite facing intense selling pressure, signs of a shift in sentiment are starting to emerge. The current trading price of DOT is $3.47, with a 3.10% drop in the past 24 hours. However, a key support level at $3.35 has held strong, indicating a possible counter-attack from buyers. If bulls defend this support level, a short-term reversal is likely, although a failure to stay above $3.35 could result in further downside. Traders are closely monitoring the $4.61 resistance level for a bullish trend confirmation, which could lead to price targets of $5.00 and $5.38.
Liquidation data revealed a significant imbalance, with $754.48K in long positions liquidated compared to only $32.84K in shorts. This imbalance indicates that bullish traders were overleveraged and unprepared for the recent price dip, reinforcing bearish short-term momentum. Most of these liquidations occurred on exchanges with high retail participation, suggesting that retail optimism was aggressively flushed out. As long as liquidations remain skewed towards long positions, the market sentiment is not fully in favor of the bulls.
Funding rates on Binance showed a sharp decline to -0.007954%, indicating that short sellers have dominated the market. While overly bearish sentiment can be a contrarian indicator, triggering a short squeeze when prices start climbing, the surge in Open Interest by 3.26% to $305.42M suggests growing interest and positions being built. This combination of rising Open Interest and negative funding strengthens the setup for volatility.
The road ahead for Polkadot’s price remains uncertain, with challenges on the bearish side such as weak buyer control, lingering sell pressure, and a lack of strong bullish candle confirmation for reversal. Price action has been sluggish, with repeated failures to break key resistance levels and cautious sentiment among sellers dominating short-term moves. However, the surge in Open Interest and deeply negative Funding Rates could potentially fuel volatility and increase the likelihood of a reversal, especially if bulls defend the $3.35 support convincingly. If momentum shifts in favor of buyers, a breakout above $4.60 becomes a realistic short-term target for Polkadot’s price.
