The price of Polkadot (DOT) continues to weaken despite supply control.

Polkadot (DOT) increased slightly by nearly 1% on Tuesday afternoon, after two consecutive correction sessions, indicating a potential bounce from the symmetrical triangle pattern on the daily chart. However, the weakening momentum of DOT following the referendum initiated by the Decentralization Organization (DAO) Polkadot – which decided to cap the max supply at 2.1 billion DOT – continues to raise concerns about bearish pressure.

###New referendum is not enough to bolster investor confidence

On Sunday, the Polkadot community officially approved the "Wish For Change" proposal with 81% support, setting the max supply of DOT at 2.1 billion tokens. This is a significant shift from the previous policy which had no supply limit, a move that is expected to ease selling pressure and align with the widespread trend of buybacks and token burns in the market.

The proposal also includes a mechanism to reduce the issuance rate of DOT on a 2-year cycle, starting from March 14. According to this roadmap, the annual issuance will gradually fall from the current level of 120 million DOT, and by 2040, the total supply is expected to be only about 1.91 billion tokens.

###Polkadot struggles to hold the 4 USD mark

Despite efforts to improve tokenomics, DOT still reacted negatively to the market, resulting in two consecutive bearish sessions. However, at the time of writing, DOT had slightly increased by nearly 1%, fluctuating just above the recently broken trendline in the symmetrical triangle pattern on the daily chart.

According to data from CoinGlass, the open contract of DOT has fallen nearly 5% in the past 24 hours, to 575.9 million USD – a sign that capital is being strongly withdrawn from Polkadot's derivatives as trader sentiment weakens.

DOT Derivative Data | Source: CoinGlassIn a negative scenario, losing the 100-day EMA at 4,011 USD would eliminate recovery prospects, opening up the risk of DOT continuing to fall back to the support area of 3,689 USD – a level that was previously tested on September 2.

Technical signals on the daily chart also reinforce the bearish scenario: the RSI index has moved out of the overbought zone, dropping to 54; while the MACD line has returned to approach the signal line, indicating the risk of a bearish crossover - a sell signal for investors on the sidelines.

DOT/USDT daily chart | Source: TradingViewConversely, to confirm the resurgence of the uptrend, DOT needs to surpass the R1 pivot at 4.266 USD – coinciding with the 200-day EMA. At that point, buying pressure may be strong enough to push the price towards the R2 region at 4.791 USD.

SN_Nour