Polkadot Treasury Spending Could Bury DOT Price 55% Deep
NOIDA (CoinChapter.com)—Polkadot (DOT) has been in the spotlight recently following the release of its 2024-H1 Treasury Report, detailing substantial expenditures on marketing and other initiatives.
The report comes at a time when DOT’s price action shows volatility, with the Polkadot token on the verge of breaking out of a bearish pattern.
DOT Price Breaking Out OF Bearish Pattern
The Polkadot token is close to breaking out of a bearish technical pattern called the ‘descending triangle.’
Market analysts often consider the descending triangle a bearish continuation signal.
The configuration features a downward-sloping upper trendline, which gradually reduces the price action’s highs, and a flat lower trendline, which is a consistent support level the price finds difficult to break.
Moreover, the pattern suggests that selling pressure is intensifying, leading to successively weaker rallies. In this setup, the potential price target is typically gauged by the maximum height of the triangle at its widest point.
Hence, DOT price is yet to confirm the breakout from the descending triangle pattern. However, confirming the bearish setup might result in the DOT price dropping over 55% to reach the projected price target near $2.4.
Community Backlash Over Polkadot Treasury Can Hurt DOT
The Polkadot community reacted strongly to the latest treasury report, which outlined a total spending of $86 million in the first half of 2024. What stood out was the team’s allocation of the largest chunk of this expenditure, $37 million, to marketing efforts.
The market efforts included a $6.8 million sponsorship deal with Inter Miami CF, the soccer club featuring Lionel Messi. However, the marketing strategy, aimed at broadening Polkadot’s reach, has instead sparked criticism.
Crypto content creator Esther Jade praised the Inter Miami sponsorship as a strategic move to leverage Messi’s global appeal. However, the broader community remains skeptical, questioning the efficiency and necessity of such high-profile spending.
Influencer marketing, which accounted for $4.8 million, also drew fire despite some defending its relevance for Web3 outreach. Ignas, another crypto content creator, defended influencer use but suggested prioritizing development and liquidity mining before spending on key opinion leaders (KOLs).
The treasury, currently holding around $245 million, could deplete within two years at the current spending rate. Polkadot’s CEO Fabian Gompf claims staking rewards will sustain the treasury for five years, but critics cite inflation and selling pressure as risks.
Upcoming Polkadot Event: Make Or Break For DOT
The upcoming Polkadot Decoded event would likely face intense scrutiny. Investors and community members will watch for signs of further fund mismanagement or unnecessary splurging.
The event could either bolster confidence if it showcases substantial progress and prudent use of funds. On the other hand, the event could worsen existing concerns if it highlights more questionable spending.
Manta Network founder Victor Ji has further intensified the controversy by accusing Polkadot of failing to drive meaningful adoption and biased against Asian projects. The allegations add to the community’s growing unease about the project’s direction and governance.
The negative sentiment surrounding the treasury’s recent activities has also coincided with a drop in Polkadot ecosystem revenues, which fell by 57% compared to the latter half of 2023. The report attributed the decline to a drastic reduction in network fees.
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