Polygon (POL), a prominent blockchain network, finds itself in turbulent waters as its price tumbled by 12% in the past 24 hours, trading at $0.457 at press time. Over the past month, Polygon has experienced a steep 33% decline, leaving 91% of wallet holders in losses and contributing to bearish market sentiment.
The price plunge coincided with a surge in trading volumes, which jumped 33% to $248 million, per CoinMarketCap. However, this increase largely stems from sell-side pressure, further dampening market confidence.
Oversold RSI Hints at Potential Rebound
Despite the downturn, technical indicators offer glimmers of hope. Polygon’s Relative Strength Index (RSI) on the four-hour chart has dropped to 23, signaling oversold conditions. Historically, such levels have preceded price rebounds, and a recovery to $0.538 is possible if buyers step in.
However, caution is warranted. The Average Directional Index (ADX), which measures trend strength, suggests the bearish momentum is still intensifying. If this trend continues, Polygon could test the next key support level at $0.416, as indicated by Fibonacci retracement levels.
dApp Activity Sees Mixed Results
Polygon’s decentralized application (dApp) ecosystem shows a contrasting narrative. Data from DappRadar reveals a 24-hour volume surge of 18%, reaching $244 million—the highest daily figure in a week. Yet, monthly dApp volumes have declined by 37%, alongside a drop in Unique Active Wallets (UAWs).
This dichotomy highlights that while dApp activity offers some strength, it hasn’t translated into broader price stability or investor confidence.
Bearish Sentiment Dominates
Polygon’s Long/Short Ratio, now at 0.885, reflects a bearish outlook, with short positions outnumbering longs. This imbalance suggests short sellers anticipate further declines, though a short squeeze could temporarily reverse this trend.
What Lies Ahead?
Polygon faces a pivotal moment. While an oversold RSI points to a possible rebound, bearish indicators like the ADX and Long/Short Ratio underline the risks of further drops. A recovery to $0.538 could provide temporary relief, but persistent sell pressure might push the price toward $0.416.
Investors are closely watching these developments to determine whether Polygon’s struggles are short-term or indicative of deeper challenges.
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.
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