Polkadot [DOT] experienced a sharp sell-off on October 6, dropping approximately 9% from $1.21 to $1.11 in a matter of hours.
The decline accelerated suddenly when the price fell from around $1.19 to near $1.12 within minutes. A brief recovery to $1.14 did not hold, and DOT continued declining throughout the day to $1.106 at the time of reporting.
Leveraged positions unwind
Futures market data revealed significant liquidation activity during the decline. Open interest dropped from $91 million to approximately $85 million during the crash before recovering to around $87.4 million.
Funding rates turned negative at -0.0016%, a shift from positive rates earlier in the week. This reversal indicates traders who had been betting on price increases are now paying to maintain bearish positions as the trend shifted lower.
Ecosystem developments in background
The sell-off occurred despite ongoing network developments. Referendum 1944, a governance proposal, seeks to launch dotUSD, Polkadot's native stablecoin, along with a DOT/dotUSD liquidity pool funded with $2.5 million each in USDT and DOT. The proposal was approved with approximately 98.4% support.
Polkadot has also been inviting developers to test its Devnet, a staging environment before mainnet deployment.
Network metrics
The Relay Chain handles approximately 1,400 transactions daily, generating roughly $23 in fees per day or about $8,400 annually. Polkadot's market capitalization stands around $2 billion, representing a 96% decline from its 2021 peak of $52 billion.
