Polygon Burns 25.7M POL in One Month — Why the Price Isn’t Reacting

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• January saw one of the largest POL burns since the token transition.
  
• Higher Polygon usage directly translates into increased token burns.
  
• Supply is tightening, but market sentiment still controls short-term price.

Polygon’s token economics are quietly tightening. In January, the network recorded one of its largest monthly POL burns since the token transition, driven by a noticeable pickup in on-chain activity. Yet despite the acceleration in supply reduction, POL’s price continues to move sideways, highlighting the gap between improving fundamentals and short-term market behavior.

The contrast underscores a familiar theme in crypto: structural improvements do not always translate into immediate price gains.

Polygon Records One of Its Largest Monthly POL Burns

Blockchain data shows that 25.7 million POL tokens were burned in January, equivalent to about 0.24% of total supply. That figure stands well above most monthly burns seen throughout 2024, marking a clear shift in the pace of token removal.

Polygon’s burn mechanism is directly tied to usage on its proof-of-stake chain. As transaction activity increases, more POL is permanently taken out of circulation. If January’s pace were sustained, nearly 3% of POL’s supply could be burned by the end of 2026 — a meaningful long-term reduction.

This reinforces Polygon’s usage-driven value model, where economic activity gradually tightens supply rather than relying on discretionary burns or one-time events.

Network Activity Picks Up After a Quiet Period

The spike in burns coincided with a surge in Polygon’s active accounts. Early January saw brief peaks between 750,000 and 800,000 active wallets, before stabilizing in a 400,000–500,000 daily range.

Rather than a single anomaly, the data points to repeated bursts of higher usage across the month. That steady baseline is important, as it suggests ongoing engagement rather than a fleeting spike tied to a single application or campaign.

Higher throughput means more fees and more tokens burned, creating a direct feedback loop between network health and supply dynamics.

POL Price Rebounds, But Technical Structure Remains Fragile

POL is currently trading near $0.11–$0.113, posting roughly a 9–10% daily gain. Trading volume has also risen, lifting the token’s market capitalization to around $1.19 billion.

Still, the broader chart tells a cautious story. POL remains far below its mid-2025 highs, and the sequence of lower highs is still intact. The relative strength index hovering in the low-40s suggests a relief bounce rather than a confirmed trend shift.

In short, momentum has improved slightly, but the downtrend has not been broken.

With a circulating supply near 10.6 billion tokens, January’s burn removed roughly $2.8–$3 million worth of POL at current prices. That amount is small compared with daily trading volumes exceeding $130 million, limiting its near-term market impact.

Also Read: Polygon (POL) Jumps 18% in Days — Can the Rally Push Toward $0.18?

This imbalance explains why POL remains range-bound despite strengthening deflationary pressure. The burn mechanism is gradually improving supply conditions, but broader market sentiment still dominates price action.

If network usage stays elevated, ongoing monthly burns could make POL more responsive to demand when crypto market conditions improve. For now, the burn trend is laying groundwork rather than delivering immediate price upside.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.