Polkadot (DOT) has weakened more than 20% after the cryptocurrency exchange FTX filed for Chapter 11 bankruptcy, ending up with a huge liquidity gap of over $8 billion. The risk of further decline is still not over, especially after another negative news that Genesis Global Capital, the crypto lending arm of Genesis Trading, had paused withdrawals over liquidity problems.
Genesis Global Capital reported that its problems had begun thanks to the Terra (LUNA) debacle, but the collapse of FTX has created unprecedented market turmoil, resulting in abnormal withdrawal requests. The team of Genesis Global Capital added:
“We recognize how challenging this past week has been due to the impact of the FTX news, and we are entirely focused on doing everything we can to serve our clients and navigate this difficult market environment.”
In response to today’s contagion fears, Polkadot, Bitcoin, and many other cryptocurrencies have continued to decline. The crypto market sentiment is still unable to show positive signs, and the outlook for risk appetite in the near term is not looking good.
See Related: Ethereum (ETH) Price Prediction After FTX Filed Chapter 11 for Bankruptcy
Technical Analysis Of Polkadot (DOT)
The price of Polkadot (DOT) has weakened from $7.41 to $5.31 in a little over a week, and the current price stands at $5.68. The price has also moved below the 10-day moving average, indicating that this cryptocurrency could fall even more in the upcoming days.
Polkadot (DOT) might have a hard time holding above the current support level, which stands at $5, and a break below this level would indicate that we could see DOT at $4 or even below. The upside potential remains limited for now; still, if the price of Polkadot (DOT) jumps above $8, the next target could be $10.
Conclusion
Many cryptocurrencies, including Polkadot, came again under selling pressure after Genesis Global Capital, the crypto lending arm of Genesis Trading, had paused withdrawals over liquidity problems. Polkadot (DOT) might have a hard time holding above the current support level, which stands at $5, and a break below this level would indicate that we could see DOT at $4 or even below.
See Related: Polygon Price Prediction: MATIC/USD Tests Critical Resistance At $1, What’s Next?