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Key Highlights
- Polkadot ($DOT) price dropped by 3.59% to $1.56 after the Federal Reserve held interest rates steady on March 18, which ended hopes for a rate cut that could have boosted risk assets like cryptocurrencies
- On March 14, the network completed its first-ever halving event, which reduced its annual token emissions by 53.6% and introduced a hard supply cap of 2.1 billion $DOT to increase scarcity
- The 21Shares spot Polkadot ETF filing cleared a major hurdle for listing on Nasdaq, which brings institutional money to $DOT
On Wednesday, Polkadot ($DOT) also experienced selling pressure in the crypto market as it fell by around 3.59% with a drop in major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and others.
Polkadot ($DOT) Falls 3.6% After Fed Decision, Halving Cuts New Supply
On March 18, the Federal Reserve announced its decision not to cut interest rates and kept them steady at a range of 3.5% to 3.75% because of ongoing inflation concerns. Apart from this, the decision was also supported by the ongoing war between the U.S and Iran that created turmoil in the global energy market and increased oil prices.
This came after U.S. President Trump’s demand to cut interest rates, and the crypto community was expecting that a rate cut would lower borrowing costs and support riskier investments such as cryptocurrencies. However, the announcement spread shock in the community.
Along with Polkadot, many other cryptocurrencies have witnessed a downward trend after enjoying a week of rally, with Ethereum trading below around 5.9% near $2,190, while Bitcoin is trading around $71,000 after soaring above $74,000 earlier this week. The crypto market is facing downward pressure.
The reasons behind the $DOT drop also include macroeconomic factors from the Fed, along with the market sentiment, where altcoins are facing more selling pressure than major cryptocurrencies.
At the time of publication, Polkadot ($DOT) is trading at around $1.56 with a market capitalization of $2.62 billion, according to CoinMarketCap. However, the cryptocurrency is still holding its daily trading volume at around $244.26 million. This is showing active trading. According to experts, investors are monitoring the economic developments before investing in volatile assets.
Some technical indicators explain the downward pattern in $DOT’s chart. According to Tradingview, the Relative Strength Index is revolving in a neutral area around the range of 50. It means that the token is neither overbought nor oversold. Still, the cryptocurrency is lacking buying power at this moment.
Similarly, the Moving Average Convergence Divergence indicator is also giving a mixed but small bearish pattern. It shows that its lines remain close to flat or dipping. This is showing slowing momentum and might be giving a sign that selling pressure will be slowed down. $DOT is currently trading near its shorter-term moving averages while still trading below longer-term trend lines.
In the current chart, the Polkadot price has a major support at $1.50, where buyers could start investing to avoid further drops. On the other hand, it has strong resistance at around $1.65. If it breaks this resistance level, it could help it recover its recent price losses with recovery.
Despite the drop, the adoption of the Polkadot ecosystem is rapidly growing. On March 14, the network completed its first-ever halving event, which reduced its annual token emissions by 53.6% and introduced a hard supply cap at 2.1 billion $DOT to increase scarcity over time. This is the major event for the protocol as it reduces inflation to support token value by limiting new supply entering the market.
The halving mechanism is reducing the rate at which new $DOT tokens are created. This change is coming from the network’s growing adoption, as fewer new tokens will be issued to validators and nominators going forward.
Apart from this, 21Shares launched a new exchange-traded fund that concentrates on Polkadot on March 6, which is the first product offering Polkadot in the US market. This ETF would join the major list of single-asset crypto products available to investors through regulated stock exchanges. This will open doors for pension funds and retail investors who need alternative investment vehicles.
