Polkadot Price Analysis: Concerns About Treasury Spending Cause $DOT to Drop
Over the previous few weeks, the cryptocurrency market took a serious hit, with Bitcoin ($BTC) momentarily falling to $54,000. As a result, Polkadot, Solana, and Ethereum are falling behind other altcoins.
Recent weeks have seen significant challenges for the cryptocurrency industry, with Bitcoin and other altcoins hitting all-time lows. Polkadot came under fire in the midst of a difficult market for its early 2024 spending. Market conditions and worries about the heavy spending of the Polkadot Treasury led to a 16% decline in Polkadot ($DOT) during the previous month.
Polkadot Gets Back Up
Polkadot ($DOT) gained some of the ground it had lost the week prior to trading above the pivotal $6 threshold last week. Following a close above its pivotal price on Sunday, $DOT came under heavy selling pressure. $DOT rose to $6.52 on Tuesday, continuing its upward trajectory in spite of the strong pressure. On Wednesday, however, $DOT faced stronger selling pressure, which caused it to fall by about 7% and close the session at little over $6.
On Thursday, sellers maintained their control over the market, which led to an 8.57% decline in $DOT. During Thursday’s trading, $DOT dropped below $6 and ultimately settled at $5.55. Friday, $DOT briefly touched $4.92 before losing support at $5.50. robust purchasing
At the recent lows, demand drove $DOT back above $5. At $5.7, $DOT ultimately ended Friday’s session. Throughout Saturday’s session, buyers’ demand kept $DOT above $6, ultimately bringing the session to a close at $6.20 On the 24-hour chart, $DOT is presently trading at $6.08, down 0.62%.
$DOT Falling 16% in 30 Days
Given the general market drop, a decrease in $DOT was anticipated. Aside from market contagion, Polkadot was harshly criticised for its exorbitant costs. Following a Treasury study claiming that the project will only have two years’ worth of budget at current expenditure rate, the Polkadot community voiced their concerns head treasury ambassador for Polkadot, Tommi Enenkel, made the following remarks in the report:
“At the current rate of spending, the Treasury has about two years of runway left, although the volatile nature of crypto- denominated treasuries makes it hard to predict with confidence.”
Furthermore,”This has sparked discussions ranging from a stricter budgeting approach to a change in the inflation parameters of the system.”
Despite the alarming estimate, Polkadot is unlikely to run out of money after spending the $245 million it has because the Treasury receives about 7% of the earnings from staking
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.