DOT Bulls Might Get Another Chance for a Comeback

Polkadot’s native coin, DOT, has experienced a decline since earlier this month, reflecting intense profit-taking after November’s gains. However, a bullish resurgence may be on the horizon.

Earlier this week, DOT was mostly bearish, dipping to as low as $7.16. This performance highlighted a notable support level after the recent dip, as the price entered the 0.5 and 0.618 Fibonacci range, indicating a potential pivot.

As of now, signs of sell pressure have cooled down in the past 24 hours, along with some accumulation appearing in DOT’s performance.

Analyzing DOT’s Prospects with On-Chain Data

This recent observation might signify the end of the retracement and a possible resurgence in demand. On-chain data supports this potential outcome, showing a shift in market sentiment.

For instance, spot flows have shifted back to positive after being negative since mid-December, with DOT experiencing approximately $2.01 million in spot inflows on Thursday morning. This shift in spot flows suggests that investors are looking to re-enter the market within the Fibonacci zone, indicating robust demand despite recent downturns.

Concerns existed that DOT could face further downside; however, spot outflows and reactions to the Fibonacci zone retest weren’t the only indicators. The derivatives segment also showed signs of shifting sentiment. The long versus short positions for DOT registered a significant shift, with about 93.35% of all DOT/USD perpetual addresses on Binance being long, even as the overall ratio across multiple exchanges favored the downside. Nonetheless, longs have improved slightly in the past three days.

The question remains: could DOT extend its downside? This possibility exists, as funding rates for DOT have been growing over the last four days, indicating more longs than shorts.

Additionally, part of DOT’s dip mid-week aligned with the overall cryptocurrency market trends, particularly following a negative reaction to the latest FED meeting.

Traders may view this recent dip as an opportunity to buy below $8. A potential 52% rally could occur from the current level to the next resistance range if demand rebounds strongly.