Polygon (POL), the popular Ethereum Layer 2 scaling solution, has been making waves recently, with a potential breakout pointing to a significant price surge. Following a steady recovery from its recent lows, the altcoin is showing bullish patterns that may suggest a move toward its all-time high (ATH) of $2.9. For many, the question remains: Is Polygon truly poised for a major price surge, or is it another temporary rally?

Polygon’s Recent Momentum

In recent weeks, Polygon has been riding a wave of positive momentum. Its price surged by more than 18% last week, pushing its market capitalization to a healthy $5.9 billion. As of now, POL is trading at $0.7063, a significant drop from its ATH of nearly $2.9, which it reached in December 2021. Despite being far from those lofty heights, Polygon’s recent uptick suggests that it may be positioning itself for another major rally.

A Bullish Divergence Could Signal Big Gains

One of the most significant signals to watch on Polygon’s chart is the appearance of a bullish divergence. A bullish divergence occurs when an asset’s price is declining, but technical indicators (like the relative strength index or RSI) show an opposite trend, such as increasing buying momentum. This is typically seen as a sign that the price could soon reverse and begin trending upwards.

A crypto analyst, Javon Marks, recently pointed out that the bullish divergence on Polygon’s chart mirrors a similar pattern seen back in 2021. If history repeats itself, this could lead to a price surge that propels POL beyond its previous ATH.

If Polygon’s price does follow the bullish divergence pattern, it could set the stage for a 300% rally, potentially breaking through the $2.9 barrier. Such a breakout could bring significant returns for investors who have been holding or accumulating POL in recent months.

Why the Current Price Level is Crucial

While the long-term outlook for Polygon looks promising, it’s important to keep in mind that the current price level still sits far below its ATH. This presents a significant hurdle, as reaching or surpassing $2.9 would require considerable bullish momentum. A sharp price move upward would need to be backed by sustained market interest and positive market conditions.

At the time of writing, POL is priced at $0.7063. This is a far cry from its ATH, but the recent price movements show that there’s potential for it to challenge previous highs. However, crypto traders should not expect an immediate return to ATH levels. Instead, they should be prepared for gradual upward movement, supported by strong technical indicators and increased buying activity.

Short-Term Outlook and On-Chain Data

To understand Polygon’s potential in the short term, it’s essential to analyze the on-chain data. Santiment’s data reveals that while POL’s price has been climbing, the trading volume has been relatively low. This suggests that while price gains are happening, the market participation remains somewhat subdued. Lower trading volume can sometimes indicate that the rally may not be sustainable in the long run, especially if major whales or investors decide to take profits.

Another important metric is the MVRV ratio (Market Value to Realized Value), which measures the profitability of tokens held in circulation. Polygon’s MVRV ratio has dropped to 37.7%, suggesting that despite recent price increases, the market is still in a phase of accumulation rather than full-fledged profit-taking. This could indicate that investors remain optimistic about POL’s future potential.

However, data from Glassnode points to increased realized losses, meaning some holders may have sold their positions at a loss during the recent downturns. This could suggest that the market sentiment remains cautious, and a further correction might be possible.

Potential Short-Term Targets for POL

For those watching Polygon closely, it’s important to understand the potential price targets in the short term. Should the bullish momentum continue, the first resistance level to watch will be around $0.73. This price point represents a liquidation barrier where many traders might look to take profits.

On the flip side, if market sentiment shifts and we see a correction, the price could dip to $0.68. This is another crucial support level that traders will need to monitor. A drop to this level could present a buying opportunity for those looking to accumulate POL before it potentially moves higher.

Conclusion: What’s Next for Polygon?

Polygon’s recent price movements and the appearance of a bullish divergence on its chart have drives optimism about the altcoin’s future. With a potential breakout looming, many believe that Polygon could be on track to challenge its previous ATH and perhaps even set a new record.

However, the short-term market activity suggests that traders should remain cautious and watch for signs of price consolidation or further corrections. If the bullish momentum continues, we could see POL break through resistance levels, making a run for $1 and beyond. For now, keeping an eye on key technical indicators and price levels will be essential for predicting Polygon’s next move.