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Polkadot prices fell sharply in 2022.
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The decline was caused by both internal and external factors.
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It will only recover if the central bank changes its tone and restores its environment.
Polkadot prices plunged more than 84% in 2022 million to record its worst year yet. The DOT slipped to a low of $4.2, well below its record high of $55. This performance was attributed to the overall weakness of cryptocurrencies, high interest rates and the collapse of major players in the crypto industry.
Polkadot Parachain Challenges
Polkadot The price recorded its worst year due to several factors. First, it took a huge toll Crypto news In the year following the collapse of FTX and Alameda Research. The decline led to major challenges in the industry as exchanges such as Binance and Coinbase recorded significant exits.
Polkadot collapsed following the collapse of Terra and its ecosystem, leading to more than $40 billion in total losses. The crash pushed more people to lose faith in crypto tokens.
Also, a very negative Federal Reserve impact on Polkadot and other cryptocurrencies. The central bank raised rates by 450 basis points and is on track to do so further in 2023. This happened as inflation hit a 40-year high.
Domestically. Polkadot’s ecosystem faced its own problems. Most notable is the de-pegging of the Agala Dollar, an algorithmic stablecoin developed by the Agala Network. Stablecoin has yet to get its app back.
Other polkadot parachains also had major challenges. For example, Enjin’s Efinity saw little traction as demand for non-fungible tokens (NFT) collapsed. Total NFTs are down more than 90% since January.
Meanwhile, Moonriver and Moonbeam have struggled to gain traction in other industries such as DeFi and the Metaverse.
Looking ahead, the main driver for Polkadot prices in 2023 will be Federal Reserve actions. A bad move by the central bank could lead to more upside for the stock. DOT and other currencies will not recover until the central bank changes its tone and its ecosystem rebounds.
Polkadot Price Overview
Returning to the daily chart, the DOT price selloff in 2022 is not taking a breather. The currency continued to fall as risks increased in the industry. As it crashed, it was able to move below all moving averages. It also moved to the lower side of the Bollinger Bands.
Therefore, the currency will continue to fall as the bears target the next key support level at $2. Only if the Fed suddenly turns treacherous will it return to around $20.
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