Polkadot [DOT] has had a rough day, being hit on all fronts. What’s going on?
The story behind DOT’s massive fall
Most of the damage happened fast.
DOT was at $1.21 on October 6. It went on to drift lower into the night, then fell off a cliff. In a few minutes, it went from about $1.19 to near $1.12.
There was a small bounce to $1.14 a few hours later. It didn’t hold.
DOT has been leaking lower all day. At the time of writing, we were at $1.106; down about 9.15% from where the slide began.
Who got hit? The futures market will tell you.
Open interest went from $91 million to about $85 million during the crash, meaning that leveraged positions got taken out in a hurry. But it has since gone back to around $87.4 million.
Funding rates also turned negative, dropping to -0.0016% at the time of this writing, despite being positive for most of the past week. Traders who were happy betting on DOT going up a few days ago are now paying to bet it goes down as a result of the recent trend.
There’s some news in the background…
Referendum 1944, a governance proposal, wants to launch dotUSD.
This is Polkadot’s own stablecoin, along with a DOT/dotUSD liquidity pool funded with $2.5 million each in USDT and DOT. At the time of this writing, the proposal has been approved with about 98.4% Aye versus 1.6% Nay.
Polkadot has also been inviting developers to come and try its Devnet [a testing ground before mainnet].
The DOT sell-off came despite different ecosystem developments in the background, but this doesn’t mean that either was driving DOT’s short-term price action.
According to Chainspect data, the Relay Chain handles about 1,400 transactions a day. Over the last 30 days, that’s brought in roughly $23 a day in fees, or about $8,400 a year.
DOT’s market cap, meanwhile, is around $2 billion. That’s 96% below its 2021 peak of $52 billion, and still about 240,000x its yearly revenue.
A stablecoin could give the network more to do, but until then, traders can only watch how DOT trends.
Final Summary
- Polkadot fell about 9% in the last day.
- Polkadot’s on-chain revenue isn’t telling the whole story.
