Cryptocurrency markets continued their disappointing performance this week as risk sentiment remains vulnerable ahead of the release of the US inflation report for July.
The price has also faced pressure, falling around 3% in the last 24 hours to $4.45.
Despite the drop, the altcoin is still up roughly 6% over the past week, marking a notable recovery after falling as low as $3.6 earlier this month.
Optimism surrounds future prospects
In the long term, investors remain optimistic about DOT's prospects.
Many still believe that Polkadot’s blockchain ecosystem will be crucial in the Web3 technological revolution, which aims to decentralize the web and empower creators and consumers, moving away from the centralized control of major social media platforms.
Investors are also excited about the proposed JAM upgrade, put forward by Polkadot founder Gavin Wood. This project will replace the current central relay chain with the more advanced and flexible JAM network, which promises increased security and efficient communication between networks.
Although JAM is still in development and unlikely to be launched before 2025, its potential to increase productivity is expected to support DOT price growth over time.
DOT/USD Technical Analysis
Looking back, Polkadot’s price peaked at $54 in the fall of 2021, just before the onset of the global inflationary crisis. Throughout its four-year history, Polkadot’s average price has hovered around $13, which is more than 190% higher than its current levels.
The recent correction pushed the DOT price towards $3.5, which is a massive horizontal support that will provide a lot of support. A sustainable bounce from this support zone could result in a move towards the next major resistance block, which is located around $6-7.
More importantly, the bounce off this important zone has created potential for the formation of a double bottom. This bullish pattern can be triggered if the price action breaks through the neckline, which is located just below the $12 level.
In this case, Polkadot price is likely to continue rising and eventually reach the $20 zone, which would mark the completion of the double bottom pattern. However, this bullish development is dependent on a more favorable risk sentiment.
