What DOT Holders Need to Know Should the Crypto Regulation Hammer Drop

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Polkadot could be safe from a regulatory apocalypse, according to the WEB3 Foundation. The DOT demonstrated weaker relative strength as the bullish momentum did not produce much upside.

Crypto regulation may soon kick into high gear, given the abundance of crypto scams and incidents where investors lost money. Peas [DOT] has identified the potential threat that may arise from such action and, as such, has issued a statement to DOT investors.

Are your holdings flashing green? Check the DOT Profit Calculator

According to a recent article by the WEB3 Foundation, DOT does not fall into the category of securities. Instead, it’s considered software, and Polkadot worked with the SEC to find sensible regulation. This is an important consideration, especially since most crypto problems in 2022 could have been avoided with proper regulation.

Polkadot’s native DOT token has changed from secure to non-secure. @Polkadot is, and always has been, coordination software. Web3 Foundations CLO @d_schoenberger, @daltonan and @josh_blockchain explain the story so far in the @SamPeurifoy podcast: https://t.co/8vigPKS0Pv

— Web3 Foundation (@Web3foundation) January 5, 2023

So, will the DOT be safe once the regulatory apocalypse is upon us? Well, everything related to regulation is still in the realm of uncertainty. Governments have yet to determine 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 affected.

The impact on price action of DOT

Strict regulations could weigh on investor sentiment, potentially triggering another crash for the crypto market. On the other hand, favorable regulations can bring more trust into the fold, in which case more people could be encouraged to get into crypto. The DOT could go either way once the regulatory framework is finally revealed.

The DOT has already fallen by a considerable margin over the past 12 months. It just delivered a bullish performance since the start of 2023 by rallying up to 8%. But this rise may be limited as it is now showing signs of selling pressure at the 50% level of RSI.

Source: Trading View

DOT MFIs saw a strong rally over the past few days, but this underscored weak upside momentum compared to the resulting price rally. Previous increases in MFIs generated a stronger increase; therefore, this latest rally suggests that demand is weak. Additionally, DOT’s market capitalization fell $150 million from the January 4 highs.

Source: Santiment

A 57.71x on the cards if DOT hits Bitcoin market cap?

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

Source: Santiment

However, there is some hope for the bulls now that the development activity metric is showing signs of increased activity. Long-term expectations for Polkadots may also improve as the network continues to hit other development milestones.

Anyway, 2023 could hold many surprises. It would not be surprising if regulatory measures were among those surprises.

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