Polkadot funding rate turns bearish, will DOT price drop below $6?

Polkadot price still hasn’t recovered above key resistance levels, and on-chain metrics for DOT are not suggesting much relief for holders.

The global crypto market cap fell below the $1 trillion mark on November 8 as most of the top cryptocurrencies reversed their recent gains. Most of the top altcoins, including Bitcoin, Ethereum, and Polkadot, are once again trading in the red.

At press time, DOT price was near $6.20, down 10% since the start of the weekly candle.

polkadot price clash

Despite the bullish momentum of the crypto market (as of yesterday), there was not much for the price of Polkadot to sustain. Recently, the Web3 Foundation tweeted arguing that DoT has changed from a security to a software one.

The tweet caused a significant movement in the market, which helped DoT increase the price by around 15% between November 4-November. 6.

Polkadot may have been in the news, but its weighted social sentiment has been negative for most of the past week. Dot social volumes, after peaking on 1 November, have also started losing momentum.

Source: Sentiment
Source: Sentiment

Despite weak prices and negative sentiment, trading volumes maintained a high level. Trading volume for DOT was at a similar level in August when the price of Polkadot was above $9.

polkadot dot price and volume
Source: Sentiment

Data from CoinMarketCap also showed a 79.52% increase in trading volume to $627 million. However, such high volume, along with bearish price action in this case, indicates a sell-off in the market.

Long liquidation $1M . hit

At press time, the price of Polkadot is down 1.5% on the day to $6.18. Data from Coinalyze highlights that around $1.3 million worth of Polkadot long positions were liquidated in the past 24 hours.

Perpetual and futures markets also painted a bleak picture for the coin as funding rates for DOT turned negative.

Polkadot Dot Price Social Volume Weighted Sentiment
Source: Sentiment

Funding rates are periodic payments made by traders based on the difference between prices in the futures and spot markets.

Another bearish trend for DOT was its low growth activity. Notably, the growth activity was declining since October 24 and is now at a 3-month low.

polkadot dot price development activity
Source: Sentiment

In addition, a percentage of the total supply of stablecoins held by DOT whales with over $5 million was also in a drawn-out downtrend. This suggests that the interest in the coin has waned on the part of whales.

As most on-chain indicators are turning bearish for DOT, it could drop to $6 in the near term. In case of a bearish invalidation, Polkadot price could potentially recover above the short-term resistances at $7.00 and $7.50.

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