Polygon (POL), a layer-2 scaling solution for Ethereum, has experienced a significant downturn in recent days. Despite a notable 13.74% gain over the past week, the cryptocurrency has succumbed to bearish pressures, primarily driven by increased whale selling activity.
Whale Activity Fuels Downward Trend
Data from IntoTheBlock reveals a surge in large transaction volume and a significant increase in the Large Holders Netflow to Exchange Ratio. This indicates that whales are actively offloading their POL holdings, exerting significant downward pressure on the asset’s price.
Technical Analysis – A Potential Floor or Further Decline?
While the daily chart suggests that POL may find support at the $0.3634 level, the persistent selling pressure from whales could push the price lower. If the support level holds, a potential rebound to $0.5792 is possible. However, a breakdown below the support level could lead to a further decline towards $0.2855.
Retail Sentiment Turns Bearish
The derivative market for POL has also shifted towards a bearish sentiment. Open Interest has declined sharply, indicating reduced market activity. Additionally, a significant number of long positions have been liquidated, while short positions have remained relatively stable. This suggests that retail traders are also turning bearish on POL.
Polygon (POL) is currently facing significant headwinds from both institutional and retail investors. The increased selling pressure from whales and the bearish sentiment in the derivative market have created a challenging environment for the cryptocurrency. While a potential support level may offer some respite, the overall trend remains bearish. Investors should exercise caution and monitor the market closely for further developments.
Despite the bearish sentiment surrounding Polygon (POL), it’s important to consider the long-term potential of the project. Polygon has established itself as a leading layer-2 scaling solution for Ethereum, offering faster and cheaper transactions. As the broader cryptocurrency market matures and adoption grows, projects like Polygon could benefit from increased demand for scalable and efficient blockchain solutions. However, in the short term, investors should remain cautious and monitor the market closely for any significant shifts in sentiment or underlying fundamentals.
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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