Where Polkadot stands after 7-day hike

• Investor expectations around DOT had turned bearish, but a recovery might not be far away.
• Polkadot still lagged behind many L1 blockchains in terms of active users.

Like many of its peers, Polkadot [DOT] enjoyed upticks in the last seven days. While this price rise lasted a while, the sentiment around the token seemed to have changed.

Read Polkadot’s [DOT] Price Prediction 2023-2024

One way to look at this is by considering the long/short ratio. Based on data from Coinglass, DOT’s long/short ratio fell to 0.97. For context, the long/short ratio represents the amount of an asset available for short selling against the amount for buying.

The indicator also serves as a measure of investors’ expectations. So, when the long/short ratio is above 1.0, it suggests bullish sentiment by traders. However, DOT’s position indicates that broader sentiment towards the token was mostly bearish.

Source: Coinglass

However, the Open Interest (OI) did not follow the long/short ratio route. Instead, it had stabilized at a low level. Known as the total number of future contracts held, the Open Interest determines market strength while assessing market sentiment.

So, the OI stability suggests that liquidation, mostly suffered by shorts may be over. Thus, DOT could be preparing to rally again.

Source: Coinglass

As per its development activity, Polkadot’s condition was unusual since it most times excelled in this area. At press time, the development activity was down 78.93. However, Polkadot’s NFT volume remained impressive.

At the time of writing, NFT volume was 1.73 million. But it is noteworthy to mention that the volume went on a non-stop increase between 11 and 24 June, hitting 4.82 million. 

The surge implies that interest in digital collectibles linked to Polkadot spiked. In addition, Polkadot NFTs were on the radar of active traders.

Source: Santiment

Furthermore, DOT still found it difficult to compete with other Layer One (L1) blockchains as regards active users. As of this writing, DOT’s active users were a little over 4,000.

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The decline suggests that many addresses might not be holding on to their DOT tokens for long. And this could be bearish for DOT in the short term.

Source: Token Terminal

On a closer look, it seemed that the DOT market sentiment has shifted from the optimism shown a few days back. But if the price recovers, as the OI indicated, then there is a chance that DOT sentiment also changes.