POL, previously known as MATIC, has experienced a downturn, seeing a reduction of close to 20% over the past month. This drop has put pressure on POL holders, with over 98% of them facing losses, indicating a pessimistic market sentiment. At present, POL is trading at $0.324. Information from CoinMarketCap reveals that trading volumes have fallen by 5%, indicating dwindling interest from traders in this alternative digital currency.
Despite the decrease in price, the Polygon network has observed a rise in activity, particularly in the realm of decentralized finance (DeFi).
Surge in Polygon DeFi TVL
The Total Value Locked (TVL) for Polygon’s DeFi has reached $1.164, according to DeFiLlama, marking a 7-month peak. This surge demonstrates an increase in the use of DeFi applications built on the Polygon network. Concurrently, DeFi volumes have been gradually climbing and currently stand at $267M. The last time Polygon’s DeFi volumes were at similar levels was in March.
The primary force behind this upsurge is the Polymarket betting platform, contributing $353M to the network’s TVL. Polymarket’s TVL has nearly tripled this month alone, with the upcoming U.S. elections driving this growth.
Despite these positive indicators, the POL token is still reflecting bearish signals.
Formation of a Rounding Top Pattern by POL
Polygon seems to be shaping a rounding top pattern, a bearish reversal signal that signifies a cooling off from its upward trend as selling pressure gradually intensifies. The completion of this pattern would occur if POL falls to test the support level at $0.31. Breaching this support could initiate a sell-off triggering a further decline in prices.
Technical indicators suggest a continuation of downward momentum. The Chaikin Money Flow (CMF) is in negative territory at -0.21, highlighting higher selling pressure compared to buying pressure. The Relative Strength Index (RSI) stands at 42, pointing towards a bearish trend. The RSI is also heading south, indicating an increase in selling activity. Failure of buyers to intervene would further bolster the bearish outlook for POL.
Derivatives Data for Polygon Reveals the Following
Derivative markets are indicating more bearish signs for POL. Despite an 8% surge in volumes, the open interest has decreased by 3% to $49M. This decline suggests that derivative traders are closing out their current positions on POL, reflecting a lack of conviction in the future price movements of this digital asset.
The long/short ratio of 0.88 indicates a higher number of short positions than long positions, emphasizing the prevailing bearish sentiment. However, on Binance, there are more traders holding long positions than short positions.
The inclination towards short positions might be due to an increase in liquidations. In the past 24 hours, over 90% of liquidated trades have involved short positions. Despite a bearish sentiment among retail traders towards POL, institutional or sophisticated investors are reportedly bullish, according to Market Prophit.