Web3 Foundation deploying 5 million DOT to fund projects could act as a savior to Polkadot price
|- Polkadot price trading at $3.82 is inching closer to a three-year low, owing to the fading bullish momentum.
- Web3 Foundation announced a $41 million program to augment the community-governed funding to help projects.
- The broader market conditions have been taxing for the DeFi space, with the majority of the Polkadot Parachains losing TVL.
Polkadot price decline, which started in February, has been going on for almost eight months now. Forming new lower lows, the altcoin is bearing nothing but losses for its investors. However, the cryptocurrency has a shot at recovery if Web3 Foundation’s new program turns out to be a success.
Web3 Foundation initiates DOT program
Web3 Foundation announced on Tuesday that it would be kickstarting a new program to support teams and individuals that intend to develop on Polkadot. Crediting the Polkadot community for the success of the network’s growth, the Foundation announced that the program would be deploying about 20 million CHF and another 5 million DOT worth around $41 million collectively.
These funds would be deployed throughout the next year and will augment the community-governed funding mechanism from the Polkadot Treasury to back projects that can contribute to the network.
Polkadot’s parachains were one of the first and most successful ventures from the network in terms of community-driven development. However, the bearish market conditions have not been kind to the parachains in the past month. Projects, including the likes of Acala, Moonbeam, Astar and more, have seen a decline of 9% to 22% in the total value locked on the chains.
Polkadot parachains TVL
Nevertheless, Web3 Foundation’s initiative might act as a positive trigger for parachains as well as Polkadot price.
Polkadot price sees red
Polkadot price has been stuck in a downtrend for a while now, forming a fresh year-to-date low in the last 48 hours. The altcoin has lost over 10% of its trading value, changing hands at $3.81 after failing to break above the 50-day Exponential Moving Average (EMA) at the beginning of the month.
To make matters worse, the bullish momentum has turned bearish, with the Moving Average Convergence Divergence (MACD) indicator observing a bearish crossover this week. This development suggests that the downtrend could continue, which might result in DOT falling to a three-year low of $3.63, which was last visited by the altcoin in October 2020.
DOT/USD 1-day chart
But if the Polkadot price manages to bounce off the critical support level at $3.63, it could initiate a recovery augmented by external network developments such as the one mentioned above. Reclaiming the support of $3.96 would prove to be crucial to DOT in order to flip the 50-day EMA into a support floor and invalidate the bearish thesis to rise beyond $4.00.
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