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Polkadot prices will plummet in 2022.
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The decline was caused by both intrinsic and extrinsic factors.
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It will only recover if the Federal Reserve changes tone and its ecosystem recovers.
Polkadot prices plunged more than 84% in 2022m to cap off the worst year ever. DOT fell to his $4.2, below the all-time high of $55. This performance is due to the overall weakness of cryptocurrencies, high interest rates and the collapse of major players in the crypto industry.
Polka Dot Parachain Challenge
Polka dot It was the worst year on record for prices due to multiple factors.First, the most affected crypto news The year after FTX and Alameda Research collapsed. The collapse posed a major challenge to the industry as exchanges such as Binance and Coinbase recorded notable capital outflows.
Polkadot plummeted following the collapse of Terra and its ecosystem, resulting in a combined loss of over $40 billion. The collapse has caused more people to lose faith in crypto tokens.
Additionally, the highly hawkish Federal Reserve has inspired Polkadot and other cryptocurrencies. The Fed has raised interest rates by 450 basis points and has indicated it will raise them further in 2023. This happened as inflation jumped to its highest level in 40 years.
first. The Polkadot ecosystem faced its own set of problems. Most important was the unpegging of Acala Dollar, an algorithmic stablecoin developed by Acala Network. The stablecoin has yet to regain its peg.
Other polkadot parachains have also had major challenges. Enjin’s Efinity, for example, saw little traction as demand for Non-Fungible Tokens (NFTs) collapsed. Total NFTs sold are down over 90% from January.
Meanwhile, Moonriver and Moonbeam are also struggling to gain momentum in other industries such as DeFi and the metaverse.
Looking ahead, the main driver of Polkadot prices in 2023 will be the actions of the Federal Reserve. A dovish shift by the Federal Reserve will lead to more stock growth. DOT and other coins will not recover until the Fed changes tone and the ecosystem recovers.
Polkadot Price Outlook
Looking at the daily chart, we can see that the DOT price decline has taken a breather in 2022. The coin continued its decline amid heightened risks in the industry. It managed to break below all moving averages as it crashed. It also moved to the lower side of the Bollinger Bands.
Therefore, the coin may continue to fall as the bears target the next critical support level of $2. A rally to around $20 will only happen if the Fed suddenly becomes dovish.
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