Polygon (POL), the popular layer-2 scaling solution for Ethereum, is experiencing increasing bearish pressure. Recent data indicates that a staggering 93.5% of POL holders are “out of the money,” meaning they purchased their tokens at higher prices and are currently facing losses. Adding to the concern, whale activity has surged as a major investor sold off 5.64 million POL worth $2.28 million, taking a $1.32 million loss in the process. This significant sell-off has fueled fears of further price declines for the already struggling token.
Despite recent bullish network partnerships, which should typically signal positive growth for a cryptocurrency, Polygon is facing significant headwinds. The price of POL has dropped below a critical demand zone at $0.45, further increasing uncertainty. The recent whale sell-off, which sent millions of POL tokens to exchanges like Coinbase, has added fuel to the fire. The whale accumulated these tokens over the past two months for $3.6 million, but the sudden shift in sentiment saw them sell at a significant loss, raising concerns about the long-term viability of the asset.
At the time of writing, Polygon’s price stands at $0.411, showing a slight 3.13% increase in the last 24 hours. However, the underlying trend remains negative, with the price still below key support levels. The descending wedge pattern that has emerged signals that the downtrend may continue unless buyers can successfully step in and regain control of the price action.
On-chain data paints a concerning picture for POL holders. A massive 93.51% of addresses are currently holding tokens that are “out of the money,” meaning the price they paid for POL is higher than its current value. Only 4.58% of addresses are in profit, underscoring the weak confidence in the market. This lack of profitability could result in more selling pressure, especially if market conditions continue to weaken.
Furthermore, heavy resistance between $0.43 and $0.45 remains, and bulls must break through this range to shift the market’s momentum. If this does not happen, POL could face even greater selling pressure, pushing the price lower and leading to additional losses for investors.
Another troubling sign for Polygon is the decline in network activity. Data reveals a 58.67% drop in the number of new addresses, along with a 44.34% decline in active addresses over the past week. This significant reduction in user engagement is often associated with weakening price action, as lower participation typically leads to reduced demand for the asset.
Polygon has been known for its ability to foster a strong and engaged community, but these recent drops in activity suggest that interest in the network may be waning. If network participation doesn’t recover soon, POL may struggle to find the demand needed to reverse its downward trend.
While retail interest in Polygon seems to be dwindling, there has been a notable surge in institutional transactions. Polygon transactions between $100,000 and $1 million spiked by 620%, indicating that larger investors are still active in the market. However, the drop in smaller transactions suggests that retail investors, who are typically essential for driving price rallies, may be losing interest in POL.
This shift in investor behavior highlights the challenge Polygon faces in maintaining upward momentum. Without the support of retail traders, any recovery will likely be slow and inconsistent. The market could continue to face downward pressure, as the absence of widespread retail participation may leave POL vulnerable to larger institutional movements.
As it stands, Polygon (POL) faces a series of challenges that could hinder its potential for recovery. The combination of whale sell-offs, declining network activity, and fading retail interest has placed significant pressure on the token. Unless the price can reclaim the $0.45 level, bullish momentum will remain limited, and POL could experience a deeper correction.
For investors, the future of Polygon remains uncertain. While there are still some institutional players active in the market, the lack of broader participation may continue to dampen any chances of a swift recovery. In the coming weeks, it will be crucial to monitor key price levels and on-chain data to determine if Polygon can regain investor confidence and begin to reverse its current downtrend.
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