Can Polkadot avoid deeper losses as overbought rally faces resistance?

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Polkadot slides 7.35% to $1.09 today

Highlights

Polkadot governance is voting on Referendum 1944 to introduce a native stablecoin, dotUSD, with $5 million in requested treasury liquidity and about 97.5% approval.
dotUSD will initially be backed by USDT reserves, transitioning to DOT collateral, with management moved to decentralized on-chain logic and no ongoing Polkadot Community Foundation oversight.
DOT trades below key moving averages with strong bearish technical signals and is expected to range between $0.997 to $1.195 in the next 2 to 3 days.

Governance vote and new stablecoin drive utility, sentiment lag persists

Polkadot governance has initiated a vote on Referendum 1944, which introduces a native decentralized stablecoin, dotUSD, and requests $5 million in initial liquidity from the treasury, with approximately 97.5% approval among DOT holders, according to Cryptotimes. The stablecoin will first be backed by USDT reserves before transitioning to a system where users can mint dotUSD using DOT as collateral, as outlined by Mpost. Additionally, the Polkadot Community Foundation has clarified through Cryptonomist that it will not be involved in dotUSD's ongoing operations, distancing oversight from the foundation and placing management in autonomous on-chain logic. These developments highlight new utility and decentralized design for the ecosystem, though price action has remained under broader selling pressure.

Bearish momentum as DOT fails key moving average thresholds

DOT trades below the MA-20 of $1.119, MA-50 of $1.151, and the daily MA-200 at $1.106, with the Ichimoku Kijun line at $1.141 acting as immediate resistance. Momentum indicators reflect prevailing weakness, as MACD signals Strong Sell and ADX indicates continued downside, while the RSI reads 41.803 and CCI also points to a Sell. The Stoch RSI registers as Overbought, suggesting possible short-term exhaustion within a broader bearish framework. Bull/Bear Power signals seller control, and the Awesome Oscillator is currently Neutral, supporting a picture of sustained selling momentum.

Downside risk dominates as minimal breakout chance seen near-term

Over the next 2–3 trading days, DOT is expected to trade in a range between $0.997 and $1.195, as defined by recent volatility. The probability of an upside breakout is very low, while further downside is considered highly likely if support at $0.997 is breached. A continuation of the bearish scenario could see new lows if momentum persists, while a bullish reversal would require a clean breakout above the $1.141 Kijun resistance to alter short-term sentiment.

Anton Kharitonov, expert at Traders Union, sees significant progress in Polkadot's decentralized governance with the dotUSD stablecoin proposal, but observes continued technical weakness. He notes that despite near-unanimous approval for dotUSD and a planned phased launch, sellers still dominate the market and DOT remains under key resistances. Downside risks remain high as bearish momentum persists and critical support at $0.997 is threatened. "Until buyers reclaim $1.141, the trend stays bearish and I remain on the defensive side."

Previously it was reported that Polkadot’s approval of a protocol-native stablecoin positioned the network for increased DeFi activity and potential technical strength. The current technical picture diverges from that outlook, as DOT remains under selling pressure with further downside likely if $0.997 support fails in the coming sessions.

Source of Data: DOT Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.