Polkadot Price Forecast: Will DOT Reach the $5 Level Soon?

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Polakdot (DOT) price has exhibited resilience in the past few days, preventing further decline, but this will likely change.

The bearishness amplified during the recent decline will likely pull the altcoin down to test $5 as support.

Polkadot Finds It Difficult to Attract Investors

The recovery of Polkadot’s price would be much quicker with the support of DOT holders and potential investors. Generally, the addition of new investors and an increase in participation tend to trigger an upswing.

This requires the asset to be a profitable, attractive investment option, which DOT seems not to be currently. The Sharpe Ratio evinces this, given it is currently at -5.17. The Sharpe ratio measures the risk-adjusted return of an investment or portfolio. It provides insight into the efficiency of an investment strategy.

Polkadot Sharpe Ratio. Source: Messari

Negative figures indicate a lack of solid risk returns, which keeps investors away from the digital asset. Given that DOT’s Sharpe Ratio is at a seven-month low, Polkadot’s price will find some difficulty recovering.

DOT Price Prediction: Down is Up Next

Polkadot’s price trading at $6.6 at the time of writing has corrected massively after invalidating the falling wedge. The altcoin is still vulnerable to additional decline since the market cues do not favor DOT.

If the support at $6.3 is breached, Polkadot’s price may decline further to $5.7. A drop to this level would represent a four-month low in price, potentially establishing it as a market bottom for 2024

DOT/USDT 1-day chart. Source: TradingView

However, since the $6.3 support is cemented, it might be difficult to break, and consequently, Polkadot’s price could end up bouncing off it. DOT would thus make its way beyond $7.00 to continue its rally to invalidate the bearish thesis and hit $8.