Why Is Polkadot Suddenly Pumping? dotUSD Is in Play

On the weekly chart, Polkadot (DOT) has been in a downtrend ever since its 2024 high in the $11 range. It's now in the low $1s, with the May high at $1.44 and the weekly MA50 at $1.60 still overhead, so it's hard to say the long-term trend has turned yet.

Around the recent lows, though, something different is showing up. In August it broke above the downtrend line connecting the January high at $2.34 and the May high at $1.44, and this week it climbed above the weekly MA20 at $0.982. This weekly candle is still in progress.

Volume really started coming in after it cleared the August high at $1.032. Two completed daily candles in a row printed more than twice normal volume, and this morning it tagged $1.28.

Right on cue, a proposal for dotUSD, a Polkadot-native stablecoin, has also been submitted to governance. But it's still being voted on, so neither approval nor launch is confirmed.

In terms of timing, price and volume moved first. So rather than explaining this rally with dotUSD alone, it's more accurate to say a catalyst was added to a rally that had already started.

After tagging $1.28, it was immediately pushed back to $1.19. The first pullback is underway on the 4-hour, and there's sell-side supply at $1.22, so it's still too early to say it'll retake the high right away.

The key price right now is $1.15. If the pullback ends above it, the next level to check is $1.28 again; lose $1.15 and it could slide to the daily MA200 at $1.10. If $1.10 breaks too, there's no longer any basis for saying the long-term trend has changed.

Polkadot had been quiet for a while, so these two days of volume really stand out.