It has been a difficult period for long-term Polkadot holders. The exchange rate between DOT/USD has plummeted from its peak of $56 in late 2021 to a low of $5. One year on and the daily chart still makes for nervous viewing, even though the crypto market has been on the rise in 2023.
The bounce off the lows has been minimal in the grand scheme of things, so it’s hard to make a bullish case. But if the lows are held, this could be interpreted as a correction within a larger bullish trend.
Zooming in to 2023, the rally may have restored some optimism to the crypto market. But Polkadot has still lost more than half its gains for the year. The invalidation level for a bullish scenario remains the same, however.
The Elliott Wave theory suggests that an impulsive move (the one that began at the start of the year) will be followed by an A-B-C structure which corrects the bullish trend. The recent decline can be seen as the A-B, and this has bullish implications as the Dollar is down and the price of DOT is falling.
For the bullish scenario to be confirmed, the price needs to rise above the key $7 resistance zone. If this happens, the bulls may hope that the price action holds above the invalidation zone.