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Why did the price of DOT fall?

Polkadot (DOT) dropped 5.26% in the last 24 hours, underperforming the overall crypto market, which fell 2.23%. Here are the main reasons:

  1. Technical resistance hit – DOT couldn’t break past the $4.58 Fibonacci level.
  2. Supply cap uncertainty – A DAO-approved limit of 2.1 billion DOT raises questions about inflation and rewards.
  3. Market-wide caution – The crypto fear index is neutral, but the altcoin season index is down.

Deep Dive

1. Technical Resistance Hit (Negative Impact)

What happened: DOT tried to push above $4.58, a key resistance level based on Fibonacci retracement, but failed despite some positive signals from technical indicators like the MACD. The 7-day RSI is at 49.81, showing weakening momentum.
What this means: After a strong 21.53% rally over the past 90 days, many traders likely took profits, causing selling pressure. Now, DOT is testing important support at $4.07, which is the 30-day simple moving average (SMA). If it falls below this, it could trigger stop-loss orders and further declines.
What to watch: Look for daily closes above $4.25 to signal a possible bullish reversal.

2. Supply Cap Decision by DAO (Mixed Impact)

What happened: Polkadot’s decentralized autonomous organization (DAO) approved a supply cap of 2.1 billion DOT, effective September 15, 2025 (Tokentopnews). This is similar to Bitcoin’s fixed supply model.
What this means: In the long run, limiting supply could be positive by making DOT scarcer. However, it also creates uncertainty about staking rewards, which currently offer about 9% annual yield, and incentives for network validators. Some holders may be selling due to concerns that inflation-driven rewards will decrease.

3. Broader Crypto Market Challenges (Negative Impact)

What happened: The total crypto market cap dropped 2.23%, while derivatives open interest increased by 20.89%, often a sign that leveraged long positions are being closed.
What this means: DOT’s larger drop of 5.26% suggests altcoins are more vulnerable during times of market caution. The altcoin season index fell 2.9% in 24 hours, indicating that investors are moving money back into Bitcoin.

Conclusion

DOT’s recent price drop is due to a mix of technical resistance, uncertainty around the new supply cap, and cautious sentiment across the crypto market. While the supply cap could make DOT more valuable over time by limiting supply, short-term concerns about liquidity and broader market risks are weighing on the price.

Key level to watch: Can DOT hold support at $4.07? If it breaks below this, the next test could be the $3.62 low from July 2025.


What could affect the price of DOT?

Polkadot’s price depends on upcoming protocol upgrades, changes to its token supply, and the progress of exchange-traded fund (ETF) approvals.

  1. Tokenomics Overhaul – The total supply of DOT is capped at 2.1 billion, which lowers inflation. This may cause short-term price drops but could be positive in the long run.
  2. Polkadot 2.0 Upgrades – New features like Elastic Scaling and the JAM protocol improve network performance and usefulness, which is good news for DOT.
  3. ETF Prospects – Applications by Grayscale and 21Shares for DOT ETFs are under review by the SEC, creating uncertainty about their impact.

Deep Dive

1. Tokenomics Revamp (Mixed Impact)

Overview:
Polkadot’s decentralized governance approved Referendum 1710, which limits the total number of DOT tokens to 2.1 billion, down from an earlier estimate of 3.4 billion by 2040. The yearly issuance of new tokens will gradually decrease, starting at 120 million DOT per year.

What this means:

2. Polkadot 2.0 Tech Leap (Bullish Impact)

Overview:
In May 2025, Polkadot launched the JAM (Join-Accumulate Machine) upgrade and Elastic Scaling features. These improvements allow:

What this means:

3. ETF Uncertainty (Mixed Impact)

Overview:
Grayscale and 21Shares have applied for spot DOT ETFs, with the U.S. Securities and Exchange Commission (SEC) expected to decide by June 2026. The SEC has delayed similar decisions for Solana ETFs due to concerns about market oversight.

What this means:

Conclusion

DOT’s future depends on balancing the benefits of a capped supply with the risks to staking rewards and how well new technology upgrades are adopted. Keep an eye on the SEC’s ETF decision and on-chain data from the JAM upgrade. A price move above the $4.58 Fibonacci resistance level might indicate renewed upward momentum. The key question is whether Polkadot can leverage its capped supply to attract more developers and outpace its competitors.


What are people saying about DOT?

The Polkadot community is actively discussing key topics like breaking through price resistance, reducing inflation, and an upcoming ETF decision. Here’s a quick summary:

  1. $4.60 resistance level: Traders are divided on whether Polkadot will break above this price or fall back.
  2. Polkadot 2.0 upgrades: New features like Elastic Scaling are encouraging optimism about the network’s future.
  3. Inflation reduction proposal: Gavin Wood’s plan to cut the number of new tokens created is generating positive buzz.
  4. Staking rewards: An 11.8% annual return is attracting long-term holders despite price ups and downs.

In-Depth Look

1. @0xBreyn: DOT Could Reach $8 Thanks to Ecosystem Growth Bullish

“$DOT closed the week at $4.61 — nearly 20% higher [...] Key upgrades like Elastic Scaling and JAM are paving the way.”
– @0xBreyn (15K followers · 320K impressions · September 13, 2025)
View original post
What this means: This is positive news for Polkadot. The network improvements aim to make transactions faster and encourage more developers to build on Polkadot, which could increase demand for DOT tokens.

2. @Polkadot: Inflation Cut Proposal Sparks Mixed Reactions

“Polkadot’s current inflation rate is 7.72% [...] aiming for under 5% by 2033.”
– @Polkadot (1.2M followers · 2.1M impressions · July 15, 2025)
View original post
What this means: This news is neutral overall. Lower inflation means fewer new tokens are created, which could reduce selling pressure. However, some network validators are hesitant about changes to their payments, which could slow progress.

3. CoinMarketCap Analysis: $4.60 Resistance Challenges Traders Bearish

“Polkadot is trading just below $4.60 [...] a clear breakout could turn the trend positive, but failure might lead to a drop to $3.30.”
– CoinMarketCap Community (July 27, 2025)
View original post
What this means: This is a short-term warning sign. Polkadot has struggled to rise above $4.60, which has increased selling pressure. As of September 22, 2025, DOT’s price dropped 5% over the week.

Conclusion

The outlook for Polkadot is mixed. On one hand, technical upgrades and attractive staking rewards are encouraging developers and long-term holders. On the other hand, the $4.60 price level remains a tough barrier for traders. Keep an eye on the SEC’s decision regarding the Grayscale ETF, expected in late 2025. Approval could bring more institutional investment, while rejection might keep prices steady for a while.


What is the latest news about DOT?

Polkadot is navigating a mix of positive upgrades and concerns from its network validators. Here’s a quick summary of the latest news:

  1. Supply Cap Approved (September 15, 2025) – The total supply of DOT tokens is now capped at 2.1 billion, sparking discussions about scarcity versus potential selling by stakers.
  2. Polkadot 2.0 Launch (September 7, 2025) – A major update improves cross-chain speed and developer tools.
  3. Institutional Division Launched (August 19, 2025) – Polkadot Capital Group aims to connect traditional finance with Web3.

In-Depth Look

1. Supply Cap Approved (September 15, 2025)

What Happened?
Polkadot’s community voted overwhelmingly (81% in favor) to limit the total number of DOT tokens to 2.1 billion. This is a significant change from earlier projections that expected 3.4 billion tokens by 2040. The decision is similar to Bitcoin’s approach, aiming to reduce the number of new tokens created each year starting in March 2026.

Why It Matters
In the long run, this is good news for DOT’s value because fewer new tokens mean increased scarcity, which can drive up price. However, there are short-term concerns. Validators—those who help secure the network—might sell their DOT if rewards from staking decrease. Also, Polkadot still faces competition from other blockchains like Solana, which could impact adoption.

(OnchainTarek)

2. Polkadot 2.0 Launch (September 7, 2025)

What Happened?
This is the biggest upgrade since 2021. It introduced elastic scaling, allowing the network to handle up to 143,000 transactions per second in tests. The update also includes XCM v5, which improves communication between different blockchains, and the JAM protocol, which replaces the Relay Chain. Additionally, a $3 million fund was set up to support developers working on decentralized finance (DeFi) and real-world asset projects.

Why It Matters
This upgrade makes Polkadot more useful by speeding up transactions and improving compatibility with Ethereum, a leading blockchain. This could attract more developers to build on Polkadot. However, the price of DOT dropped about 5% in the week after the launch, suggesting investors are waiting to see real growth in network use, like more parachains or increased total value locked (TVL).

(MEXC News)

3. Institutional Division Launched (August 19, 2025)

What Happened?
Polkadot Capital Group was created to bring traditional financial institutions into the Web3 space. It offers tools for tokenizing assets, staking, and integrating decentralized finance. Early partners include some asset managers and over-the-counter (OTC) trading desks, though their names haven’t been disclosed.

Why It Matters
This move could help bring more stability and investment into DOT by attracting big financial players. However, there is some skepticism because similar efforts with Ethereum took time to gain traction. Also, Polkadot’s regulatory environment is less clear compared to Bitcoin and Ethereum, which could slow adoption.

(Binance Square)

Conclusion

Polkadot is focusing on limiting supply, improving network performance, and expanding into traditional finance to regain momentum. While these upgrades strengthen the project’s foundation, the future of DOT depends on whether stakers remain committed and developers choose to build on its platform. The key question is: will the benefits of reduced inflation outweigh the risks of validators selling off their tokens?


What is expected in the development of DOT?

Polkadot’s upcoming plans focus on making it compatible with Ethereum, growing decentralized finance (DeFi), and improving its core technology.

  1. Polkadot Hub Mainnet (September 2025) – Launch of an Ethereum-compatible smart contract platform.
  2. JAM Upgrade (Q4 2025) – New Relay Chain designed for better scalability.
  3. Full EVM Compatibility (December 2025) – Easy migration for Ethereum-based apps.
  4. DOT-Backed Stablecoin (2025–2026) – Community-led stablecoin backed by DOT tokens.
  5. Elastic Scaling Expansion (2026) – Flexible resource allocation for parachains to handle demand spikes.

Deep Dive

1. Polkadot Hub Mainnet (September 2025)

Overview: Polkadot plans to launch the Polkadot Hub, a smart contract platform that works with Ethereum’s technology, in September 2025. This platform is designed to attract developers from Ethereum and similar networks by making it easier to build and use apps while benefiting from Polkadot’s security and ability to connect different blockchains. Early focus will be on building liquidity, integrating DeFi projects, and partnering with platforms like Hydration and StellaSwap (Polkadot Forum).

What this means: This is a positive step for adoption because it lowers barriers for developers and users familiar with Ethereum tools. However, it faces competition from established Ethereum Layer 2 solutions like Arbitrum and potential delays in connecting liquidity across chains.

2. JAM Upgrade (Q4 2025)

Overview: The JAM (Join-Accumulate Machine) upgrade will replace Polkadot’s current Relay Chain with a new system made up of multiple parallel chains. This change aims to remove transaction fees and support over 1 million transactions per second. The upgrade is supported by 38 development teams and includes a 10 million DOT token incentive pool to encourage builders (CoinMarketCap).

What this means: This upgrade is promising for improving scalability and attracting developers. However, the complexity of moving to the new system and possible technical challenges during rollout could slow down initial adoption.

3. Full EVM Compatibility (December 2025)

Overview: By December 2025, Polkadot aims to fully support the Ethereum Virtual Machine (EVM), which means developers can run Ethereum apps written in Solidity on Polkadot without changes. This follows successful testing on Kusama, Polkadot’s experimental network, in October 2025 (X (Twitter)).

What this means: This is generally positive because it makes it easier for developers to move their apps to Polkadot. However, there’s a risk that Polkadot could be seen as just another Ethereum-compatible chain, which might weaken its unique multi-chain identity.

4. DOT-Backed Stablecoin (2025–2026)

Overview: Polkadot is developing a decentralized stablecoin backed by DOT tokens, aiming to compete with popular stablecoins like Tether and Circle. The community will help decide its design, with early ideas focusing on overcollateralization (holding more DOT than the stablecoin’s value) and ways to earn yield (X (Twitter)).

What this means: This could increase the usefulness of DOT and boost DeFi activity on Polkadot. However, regulatory concerns around algorithmic stablecoins remain a significant risk.

5. Elastic Scaling Expansion (2026)

Overview: After launching in May 2025, Elastic Scaling will be expanded in 2026 to allow parachains (independent blockchains connected to Polkadot) to rent extra computing power (“cores”) when demand is high. Early tests on Kusama showed it can handle 143,000 transactions per second at 23% capacity (Cryptofront News).

What this means: This feature is promising for businesses, especially in gaming and real-world asset sectors, by providing flexible performance. Its success depends on affordable pricing and developer adoption.

Conclusion

Polkadot’s roadmap for 2025–2026 aims to balance compatibility with Ethereum and its own innovations, focusing on DeFi growth and scalability. The Polkadot Hub and JAM upgrades could drive wider adoption, but challenges like execution risks and ecosystem fragmentation remain. The big question is whether Polkadot’s multi-chain approach can outpace Ethereum’s strong network or if it will struggle to stand out in a crowded blockchain space.


What updates are there in the DOT code base?

Polkadot’s latest updates improve how different blockchains work together, boost network speed, and offer better tools for developers.

  1. Smart Contracts Launch (Dec 2025) – New systems let developers use Ethereum’s popular programming language (Solidity) and Polkadot’s own technology to build apps.
  2. JAM Protocol Integration (Q3 2025) – A new method to increase network speed up to 1 million transactions per second (TPS).
  3. Offline API & Metadata Caching (v1.14.0) – Makes transactions faster and uses less internet data.

Deep Dive

1. Smart Contracts Launch (Dec 2025)

Overview: Polkadot will introduce two new systems: EVM (Ethereum Virtual Machine) and PVM (Polkadot Virtual Machine). This means developers can run Ethereum-based apps without changes or use Polkadot’s own system for more advanced projects.

Testing starts on Kusama (Polkadot’s experimental network) in October 2025, with the full launch on Polkadot’s main network in December.

What this means: This is good news for Polkadot because it makes it easier for developers familiar with Ethereum to build on Polkadot. It also opens the door for powerful new apps, like those using artificial intelligence. (Source)

2. JAM Protocol Integration (Q3 2025)

Overview: The JAM (Join-Accumulate Machine) protocol combines Polkadot’s core network with smart contract features similar to Ethereum’s, aiming to handle up to 1 million transactions per second.

JAM can adjust resources dynamically to meet demand, making the network faster and more efficient. Early tests on Kusama showed speeds of 143,000 TPS using less than a quarter of the system’s processing power.

What this means: This upgrade positions Polkadot as a strong competitor to other fast blockchain platforms like Ethereum and Solana, especially for complex decentralized apps (dApps). (Source)

3. Offline API & Metadata Caching (v1.14.0)

Overview: The new Offline API allows users to create and sign transactions without needing to be connected to the network all the time. Metadata caching reduces the amount of data needed per session by about 500 KiB.

These improvements lower reliance on centralized servers and make the network more efficient, especially for users with limited internet access.

What this means: While this update mainly helps developers and doesn’t directly affect most users, it supports Polkadot’s goal of being more decentralized and user-friendly. (Source)

Conclusion

Polkadot is focusing on building a network that’s fast, works well with other blockchains, and is easier for developers to use. With smart contracts launching soon and new tools like JAM and Offline API, Polkadot could see more projects joining its ecosystem and growing rapidly.