Polkadot (DOT) is at a pivotal juncture after a sharp 32% monthly decline that has dragged the token’s price down to the critical $3.50 support level. This level has historically served as a springboard for bullish reversals, and its ability to hold now could determine whether DOT rebounds toward $6.00 or sinks to new lows. With surging trading volume, increased whale interest, and a complex macro backdrop, the market is watching closely to see what comes next.

Over the past few weeks, DOT has experienced consistent downward pressure. The token has closed three consecutive weeks in the red, signaling sustained bearish sentiment. At the time of writing, DOT is trading around $3.56, having lost more than 3% on the day alone. This steady decline places the asset in a high-stakes position, as the $3.50 mark has historically proven to be a significant support level—one that previously fueled price recoveries in both mid-2023 and late 2024.

What makes this level particularly important now is the convergence of technical and on-chain signals. According to market analysts and crypto commentators, Polkadot is approaching the final phase of its accumulation cycle. One analyst on X (formerly Twitter), known under the pseudonym Crypto Catalysts, highlighted that the accumulation phase for DOT may soon come to a close, predicting a sharp upside rally if historical patterns hold.

Adding fuel to the bullish argument, CoinGlass data revealed that $1.6 million worth of DOT was withdrawn from centralized exchanges within the past 24 hours. This significant outflow could suggest that large holders are removing tokens from trading platforms for long-term storage—a common signal of accumulation and reduced short-term selling pressure. While the market remains bearish in the short term, long-term investors appear to be quietly positioning for a potential reversal.

Despite the price weakness, DOT has seen a notable 50% spike in trading volume during the recent downturn. Such an increase in activity typically points to heightened investor interest, albeit not always for positive reasons. In this case, the surge may indicate that sellers are aggressively exiting their positions, contributing to the downward momentum. Still, high trading volume at support levels can also signify capitulation—often a precursor to trend reversals.

Technically, DOT is sitting on the last major weekly support zone before entering price discovery to the downside. If the token manages to hold above $3.50 and avoids a daily close below this level, there’s a strong chance it could mirror past recoveries. In those instances, DOT bounced strongly from this region, rallying to the $5.00–$6.00 range within weeks. Repeating this performance would represent a potential 40%–70% upside for current holders.

However, this time, the macro environment adds another layer of complexity. Ongoing geopolitical tensions in the Middle East—particularly between Israel and Iran—have rattled global markets. Recent developments, including statements from the U.S. President warning Iran of potential consequences, have created increased uncertainty. In risk-off environments, digital assets like DOT are often the first to feel the impact of shifting investor sentiment. If tensions escalate further, the $3.50 support could come under greater pressure.

On the flip side, several technical indicators remain oversold, suggesting the token may be nearing a bottom. The Relative Strength Index (RSI), for instance, is approaching territory that historically aligns with reversal zones. If market conditions stabilize and DOT retains support, a return to bullish momentum is not out of reach. Some investors may view the current level as a buying opportunity, banking on DOT’s track record of bouncing from this exact zone.

In summary, Polkadot’s fate now hinges on whether the $3.50 support level can withstand mounting pressure. Strong exchange outflows and historical reversal patterns suggest potential for recovery, but bearish sentiment and global uncertainty remain key risks. If bulls step in and defend this support zone successfully, DOT could be poised for a significant rally in the coming weeks. If not, traders may need to brace for a further slide, as the next solid support is far below current levels.