Polygons [POL] has been encountering a downturn in various market cycles. Over the last month, it has observed a 34% decrease in price, continuing the downward trend over the past week with a 4.53% drop within the last 24 hours.
Analysis by CryptoCrypto suggests that this downtrend could escalate as key market indicators have turned bearish, especially with the capital outflow from the asset.
Significant Capital Outflow Puts 99% of Investors at a Loss
Within the last 24 hours, POL has seen a substantial negative chain netflow compared to other chains, indicating a withdrawal of liquidity from the network and signaling a bearish sentiment.
Approximately $13.2 million worth of POL has been offloaded and taken out of circulation, underlining a prevailing bearish outlook and a potential further decline.
CryptoCrypto has observed that this massive capital outflow has placed a significant portion of investors in a loss-making position. Presently, almost 99.73% of POL holders are experiencing losses, with only a mere 0.27% in profit.
The apprehension of further financial setbacks could trigger a considerable sell-off from this group, adding pressure on the asset’s valuation to plummet.
Approaching a Price Level of $0.24
The selling pressure from market participants and the outflow of capital could drive the asset’s price downward, a trajectory clearly visible on the price chart.
Currently, POL is within a descending channel, depicting lower highs and lows in its price movement.
Should POL breach the support level at $0.278, there is a possibility for it to descend towards the support zone around $0.243, a previous low noted on the 3rd of February.
Under intense selling pressure, the asset might dip below $0.243, establishing a new low in subsequent trading sessions.
Convergence of Spot and Derivatives Trading Sentiments
Both the spot and derivatives markets are synchronized towards a potential downturn in prices.
In the past 24 hours, the derivatives market has been unwinding positions, with Open Interest declining by 1.29% to $78.41 million, while trading volume surged by 73.18% to $68.09 million.
A drop in Open Interest combined with an increase in trading volume signifies robust selling pressure in the market, backed by strong momentum.
The exchange netflow corroborates this narrative, with $181,500 worth of POL being sold over the past three hours, indicating a shift from buying to selling among market participants.