Polkadot is down the ranking when writing, dropping four percent against the greenback in the past 24 hours.
Per the formation in the daily chart, buyers have the upper hand, but the immediate term looks bearish. This follows the inability of buyers to clear last week’s highs at $9.5 as sellers flow back.
Technically, there are lower lows versus the upper BB, pointing to possible exhaustion. Traders must watch how prices react at the middle BB and $8.5 in the medium term.
Losses below August 8 and 10 may cause panic, triggering a sell-off and heaping more pressure on DOT in the short to medium term.
The Acala Exploit
The slide of DOT may be correlated with the exploit of the Acala Dollar, aUSD. The stablecoin, native to the Polkadot Network, is an overcollateralized stablecoin pegged to the USD.
We have identified the issue as a misconfiguration of the iBTC/aUSD liquidity pool (which went live earlier today) that resulted in error mints of a significant amount of aUSD
1/— Acala (@AcalaNetwork) August 14, 2022
However, following an exploit over the weekend, the stablecoin de-pegged. It plunged to as low as 0.05 versus the USD before gradually recovering.
The de-peg was due to an attack on its network which saw the dump of 1.2 billion aUSD. Acala’s developers have since identified the exploit as a configuration issue in the iBTC/aUSD liquidity pool leading to the significant release of the stablecoin.
“We have identified the issue as a misconfiguration of the iBTC/aUSD liquidity pool (which went live earlier today) that resulted in error mints of a significant amount of aUSD.”
Polkadot Price Analysis
DOT is within a bullish breakout formation despite losses on August 14.
Currently, the coin is down 13 percent from last week’s highs and buy trigger at $9.7. However, the DOT uptrend is still firm, and there could be more room for upsides.
Notice that DOT may be completing the second stage of a breakout formation, the retest, considering that prices are inching lower but with lighter trading volumes and the previous resistance, now support, remains valid.
Accordingly, as long as price action is contained within the August 8 and 10 bull bar, every low above $8.5 may offer opportunities to double down on dips from an effort versus result perspective. The first target would be $9.7 and later $12 in the medium term.
Conversely, conservative traders may wait for confirmations above $9.7 before riding the uptrend, targeting $12.
Any sharp dump below $8.5 with increasing participation levels will pour cold water on bulls’ hopes, possibly forcing DOT back to $7.65.
Technical charts courtesy of Trading View
Disclaimer: Opinions expressed are not investment advice. Do your research.
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