Polkadot (DOT) faces technical challenges: price decline widens, institutional participation diminishes

Polkadot token DOT has recently shown weak performance, with a noticeable decline in market participation. According to the latest data, DOT’s current price is $1.94, with a 24-hour decrease of -0.92%. In comparison, the CoinDesk 20 cryptocurrency index only fell by 2.5% during the same period, indicating that DOT’s relative performance is significantly lagging behind the broader market. This phenomenon reflects a waning investor interest in the asset and insufficient institutional capital momentum.

Trading activity has significantly declined, market confidence is lacking

Data shows that DOT’s trading volume has decreased by 9% compared to the 30-day average, a level that is below normal market participation, directly reflecting a reduced enthusiasm for allocating funds to this token. The 24-hour trading volume is only $721.45K, indicating a low activity level. According to CoinDesk Research’s technical analysis model, the underperformance of DOT mainly stems from the lack of institutional involvement. In the current market environment, funds are flowing toward more momentum-driven assets, while DOT is becoming marginalized.

This pattern of declining low trading volume is particularly noteworthy from a technical perspective, as it often signals limited potential for a subsequent rebound. Without sufficient capital support, any counter-move is likely to lack sustainability.

Technical pattern shows consolidation, key support levels need verification

From a technical analysis standpoint, DOT is currently in a clear range-bound consolidation phase, awaiting a directional catalyst. The main support level is centered around $1.76, which has become a critical level for short-term defense. This support has been tested multiple times, demonstrating some degree of resilience.

The current trading structure indicates that market participants are hesitant about further downside but also lack confidence in an upward move. In the absence of positive fundamental news, technical factors are entirely driving the price trend. Analysts point out that only the emergence of clear positive catalysts—such as ecosystem developments, technological upgrades, or macro liquidity improvements—can break this deadlock.

Market liquidation risks intensify, leverage trading should be cautious

The broader market environment is also putting pressure on DOT. Over the past 24 hours, the entire crypto market experienced liquidations exceeding $625 million. Notably, Hyperliquid platform recorded a single liquidation of $40.22 million in ETH-USD, setting a new record for single liquidation size. The platform’s total liquidation losses amounted to approximately $220.8 million, mainly concentrated in short positions.

This wave of liquidations was triggered by sharp Bitcoin volatility, driven by macro-level uncertainties—particularly the outlook on US trade policies, bond market fluctuations, and expectations surrounding US President’s speech at the Davos World Economic Forum. This serves as a reminder to investors that excessive leverage in such a high-risk market environment can be very dangerous.

Outlook and recommendations

In the short term, DOT is expected to maintain a defensive stance. Investors should closely monitor the effectiveness of the $1.76 support level. Any move below this level could trigger a larger decline, while a breakout above resistance requires clear volume confirmation. In the current market lacking a clear direction, cautious trading and risk management should be the top priorities for participants.