According to the WEB3 Foundation, Polkadot may be safe from a regulatory apocalypse. DOT showed lower relative strength as bullish momentum failed to provide much upside.

Crypto regulation may soon shift into high gear given the plethora of crypto scams and incidents of investors losing money. Dot [DOT] identified the potential threat that may come with such action and has therefore released a statement to DOT investors.

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According to a recent report from the WEB3 Foundation, DOT does not fall into the securities category. Instead, it is considered software and Polkadot is working with the SEC to pursue sensible regulation. This is an important consideration, especially given that most of the crypto problems in 2022 could have been avoided with proper regulation.

So, will DOT be safe as the regulatory apocalypse comes upon us? Well, everything related to regulation is still in the realm of uncertainty. Governments have yet to figure out which regulations will work without doing more harm than good. Draconian regulations could be bad for the entire crypto segment, in which case DOT could be negatively impacted.

The impact on DOT’s price action

Strict regulation could erode investor sentiment, potentially triggering another crash for the crypto market. On the other hand, favorable regulations can bring more confidence to the herd, in which case more people can be encouraged to get into crypto. DOT could follow one of these avenues once the regulatory framework is finally unveiled.

DOT has already tanked by a significant margin over the past 12 months. It just delivered a bullish performance since the start of 2023 with a gain of as much as 8%. But this upside may be limited as it is now showing signs of selling pressure at the 50% level of the RSI.

Source: TradingView

DOT’s MFI registered a major rebound in recent days, but it underlined weak bullish momentum compared to the resulting price rally. Past MFI rallies provided a stronger upside; hence this latest rally suggests that demand is low. In addition, DOT’s market cap fell as much as $150 million from its Jan. 4 highs.

Source: Sentiment

A 57.71x on the chart if DOT hits Bitcoin’s market cap?

The drop in market cap indicates that some selling pressure is returning to the market, so there may be more downside in store. DOT’s volatility indicator suggested that the cryptocurrency may experience less volatility in the coming days.

Source: Sentiment

However, there is some hope for the bulls now that the development activity metric is showing signs of heightened activity. Polkadot’s long-term prospects may also improve as the network continues to hit more development milestones.

Either way, 2023 may have many surprises ahead. It would not be surprising if regulatory measures are among those surprises.

This post What DOT holders need to know in case the crypto regulation hammer falls

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