XLM Slips 3% Toward $0.16, DOT Sheds 6% as Bitcoin Holds Flat on the Week

Three Things to Know

• Polkadot's Treasury lost funds to an attacker who used a bug Parity had already fixed but never shipped.
• DOT sits below both major moving averages, with sellers still steering the trend.
• The round $1 mark is the line bulls must win back before anyone talks about recovery.

Parity Technologies has detailed how an attacker drained Polkadot's Treasury through a cross-chain messaging flaw. The company had patched the bug months earlier, but the fix never made it into the live runtimes. No user funds were lost.

The report hit a DOT chart that was already weak, while Stellar drifted lower with the sector. Traders now want to know whether the exploit news is priced in, or whether it gives sellers fresh ammunition.

A Patched Bug That Never Shipped Cost Polkadot's Treasury $1.38 Million

Polkadot's Treasury lost about $1.381 million in an attack late last month, Parity Technologies said in an incident report. The attack ran from Oct. 24 to 26. The attacker used a flaw in XCM, the network's cross-chain messaging system. Parity had fixed that bug in its codebase in June. The patch missed the stable-2606 cutoff, however, and never reached the affected production runtimes.

The target was dotUSD, the decentralized stablecoin Polkadot launched in October. The exploit cut dotUSD's recorded supply without touching account balances. That distorted the DOT/dotUSD pool, so dotUSD could be swapped for DOT at artificial rates. The Treasury was the pool's only liquidity provider, so no users lost funds. dotUSD stayed fully backed by USDT.

Snowfork halted its relayers on Oct. 24. The attacker ran its own relayer and resumed about six hours before runtime 2.5.1, the XCM fix, took effect. Runtime 2.5.2, enacted Oct. 30, corrected the supply.

Parity first rated the bug medium severity, then upgraded it to critical. The company is now overhauling its security processes. Who profited from the trades remains unresolved.

DOT Needs to Reclaim $1.00 Before Any Recovery Talk

Polkadot (DOT) daily price with the nearest support (green) and resistance (red). Source: TradingView

DOT trades near $0.95, down about 6% over the past week. The bigger damage came earlier. The token has lost roughly 23% in a month, so the exploit report landed on a chart that was already sliding.

Both major trend lines sit overhead. The 50-day moving average, which tracks the average closing price over that span, is near $1.05. The 200-day average is higher, around $1.16. With price below both, each line now acts as a ceiling. Rallies toward them have a good chance of meeting sellers.

RSI, a 0 to 100 gauge of momentum, reads 38. That is weak, but it is still above the oversold zone below 30. In plain terms, sellers have the upper hand, yet the market has not reached the kind of washed-out level that often draws bargain hunters.

Other signals agree. Momentum is still heading down, and a trend is forming with sellers in control. That mix suggests the decline has room to run before it exhausts itself.

On the daily chart, the first floor sits near $0.87. A clean break there would expose the next support around $0.81, a level that would put DOT deep into fresh lows for the year.

Bulls first need to reclaim $1.00, a round number that also marks the nearest resistance. A daily close above it would ease the pressure. The next hurdle stands near $1.14, just under the 200-day line.

Stellar Sellers Lose Some Grip Under a Low Ceiling

Stellar (XLM) daily price with the nearest support (green) and resistance (red). Source: TradingView

Stellar's XLM trades near $0.17, down about 3% on the week. The monthly picture looks closer to DOT's, with a slide of roughly 22%. XLM has no exploit of its own to blame. It is drifting lower with the rest of the sector.

The token sits under both trend lines. Its 50-day average is near $0.18. The 200-day line sits a bit higher. Both act as ceilings for now. Price is also pressed right against nearby resistance, so buyers have little room before they meet sellers.

RSI reads 41. That is weak, though less so than DOT's reading. Sellers still lead, and the trend gauge shows a real downtrend in place.

One signal stands apart. The MACD, a tool that compares short and longer price averages, has crossed above its signal line. That means momentum is improving even while price stays soft. Selling pressure appears to be easing, though it has not reversed.

The first floor sits near $0.16. A break there would open the way to around $0.14. On the upside, a daily close above current resistance would put the next ceiling near $0.19, where the 200-day line also waits.

Where the Next Three Days Could Break

Two levels on the DOT chart will likely decide the short-term path for both tokens.

• Bullish: DOT closes above the round-dollar resistance, and XLM breaks through the ceiling it is pressing against. That would open the way to the next resistance levels for each coin, just under their 200-day lines. The case fails if DOT loses its first floor.
• Bearish: DOT cracks that first floor and slides toward its second support, while XLM slips under its nearest floor. A DOT daily close back above the dollar mark would cancel this view.

Trust Has to Return Before Buyers Do

DOT remains in a seller-led trend, and the exploit gives buyers one more reason to wait. Until the token wins back the levels above it, rallies look like selling chances. XLM appears marginally healthier, with improving momentum.

The main risk sits with Parity. New details on who profited from the trades, or on its security overhaul, could jolt DOT quickly in either direction.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.