Recent market trends have seen POL (formerly known as MATIC) facing significant bearish pressure, with a nearly 20% decline over the past month. This has resulted in over 98% of POL holders experiencing losses, reflecting a prevailing negative sentiment in the market.
Currently trading at $0.324, data from CoinMarketCap indicates a 5% decrease in trading volumes, signaling diminishing interest in this particular altcoin among traders.
Despite the price depreciation, the Polygon network has been experiencing increased activity, particularly within the decentralized finance (DeFi) sector.
Notable Surge in Polygon DeFi TVL
At present, the Total Value Locked (TVL) in Polygon’s DeFi ecosystem is reported at $1.164 by DeFiLlama, marking a 7-month high in TVL since March. The rise in TVL showcases a heightened utilization of DeFi applications operating on the Polygon network.
Moreover, DeFi volumes have been steadily climbing and currently stand at $267M. This level of activity has not been observed since the month of March, indicating a resurgence of interest in Polygon’s DeFi offerings.
One of the primary drivers behind this surge is the Polymarket betting platform, contributing a significant $353M to the network’s TVL. Notably, Polymarket’s TVL has nearly tripled in the past month, partially fueled by the anticipation surrounding the U.S. elections.
Despite these positive developments, the POL token continues to exhibit bearish signals.
Identifying the Rounding Top Pattern in POL
Evident signs suggest that Polygon may be forming a rounding top pattern, indicative of an imminent bearish reversal. This pattern implies that POL might be cooling off from its recent bullish trajectory as selling pressure gradually intensifies.
If POL manages to test support at $0.31, it is likely to complete the rounding top pattern. Furthermore, breaching this support level could trigger a sell-off, driving prices lower.
Technical indicators, including the Chaikin Money Flow (CMF) and Relative Strength Index (RSI), corroborate the potential for further downward momentum. The negative CMF value of -0.21 indicates higher selling pressure, while the RSI reading of 42 underlines the prevalent bearish momentum.
Moreover, the derivatives market for POL portrays a bearish outlook. Despite a notable 8% surge in trading volumes, open interest has decreased by 3% to $49M. This decline signifies that derivative traders are unwinding their positions on POL, exhibiting a lack of conviction in the coin’s future price movements.
With a long/short ratio of 0.88 indicating a dominance of short positions over long ones, the market sentiment leans towards a bearish stance. Despite this, Binance reports a higher number of traders with long positions compared to short positions.
The prevalence of short positions could be attributed to a notable increase in liquidations, with over 90% of the liquidated trades in the last 24 hours being short positions. Interestingly, while retail traders showcase a bearish sentiment towards POL, institutional or seasoned traders maintain a bullish stance according to insights from Market Prophit.