Polkadot price has been under pressure for several months now as a risk-off mood continues to weigh on the broader asset class of cryptocurrencies. Since mid-May, it has been trading below $10; a zone that had been a steady support for the altcoin.
As at the time of writing, DOT/USD was down by 0.33% at $6.36. other altcoins like Cardano, Dogecoin, and Shiba Inu have also had their performance decline in recent months. Indeed, the global crypto market cap has dropped to below the critical level of $1 trillion at $922.32 billion on Thursday.
What’s driving the market?
Strong US dollar
One of the reasons behind the persistent downtrend in polkadot price is the risk-off sentiment that has exerted pressure on risky assets such as cryptocurrencies. Behind this mood is the ultra-hawkish Federal Reserve and subsequent rallying of the US dollar. High inflation and heightened recession fears have also strengthened the currency at the expense of dollar-priced assets.
On Wednesday, the dollar index hit a fresh 20-year high at $114.83. conventionally, risk assets such as precious metals, stocks, and cryptocurrencies often have their value decline in an environment of a strong US dollar.
The challenges within the Polkadot system have also been a bearish driver of polkadot price. Recent data shows that some of its key parachains such as Acala and Moonbeam have been under pressure.
For instance, Acala network’s stablecoin – aUSD – continues to trade below the critical zone of $1. Acala’s total value locked (TVL) has dropped from over $1.5 billion to $49 million. The decline in these projects has largely contibuted to the downtrend in polkadot price.