Polygon (POL) is currently attracting significant attention in the cryptocurrency space as whale activity has increased amid a recent price pullback. The surge in whale demand could suggest that POL is on the verge of a potential upswing, leading to speculation about whether the token is undervalued at its current price levels. Following a 20% price drop, large investors, or whales, have stepped in, purchasing a notable 59 million POL tokens in just the past 48 hours. This surge in demand signals growing confidence in Polygon’s potential, but is it really undervalued or just another opportunity for whales to take advantage of a temporary dip?

Whale Activity and Market Sentiment

Whale transactions are always a key factor in assessing market sentiment. Although the 59 million POL tokens bought by whales seems like a significant number, it’s worth noting that this is relatively small compared to the total circulating supply of over 10 billion POL tokens. This recent activity is happening amidst an increasingly bullish trend across the altcoin market, with many investors eyeing the next potential breakout. While this surge could be attributed to whales capitalizing on a 20% discount, the larger question remains: is Polygon truly undervalued, or are whales simply looking to exploit a temporary market correction?

Profitability Metrics: A Mixed Picture

To better understand whether POL is undervalued, we can turn to the Market Value to Realized Value (MVRV) ratio, a useful tool for measuring profitability. The 30-day and 180-day MVRV ratios show positive readings of 35% and 44%, respectively. This means that investors holding POL for the past month and six months are seeing significant unrealized profits. Even with the recent price correction, these profits remain relatively unchanged, suggesting that long-term holders are in a favorable position.

However, the broader picture of profitability tells a slightly different story. According to IntoTheBlock data, only about 10% of POL holders are currently in profit. In contrast, over 85% of addresses holding POL are still in the red, meaning most holders are underwater despite the recent price recovery. This situation implies that many investors might prefer holding onto their tokens, hoping to break even rather than selling at a loss. This dynamic could support further upward movement for POL as holders resist offloading their positions during the current rally.

Technical Indicators and Price Action

Analyzing POL’s price chart reveals that the token still has substantial room for growth. One key indicator, the On-Balance Volume (OBV), is showing a low value, indicating that the buying pressure needed to push prices higher has not yet fully materialized. AMBCrypto’s analysis highlights that a breakout above the $0.60 resistance level could trigger a more aggressive recovery. Moreover, if POL can push past $0.80, it could see a surge toward the next resistance level at $1.20, marking a potential gain of up to 160%.

The recent pullback in price hasn’t discouraged investors as much as expected, with price action still trending upwards. This suggests that the market may not have fully priced in Polygon’s potential yet, and the current price levels may present a buying opportunity for those looking to capitalize on a future rally.

Long-Term Outlook: Room for Growth

POL’s position in the broader cryptocurrency market suggests that it is well-placed for future growth. Despite the dip, Polygon remains a prominent player in the DeFi and NFT spaces, with ongoing developments and increased adoption. The whales’ recent buying spree signals confidence in the token’s long-term prospects. Given that the majority of holders are still at a loss, it is likely that many will hold their positions, waiting for a chance to break even. This could provide the momentum needed for a sustained rally.

Conclusion

In conclusion, while POL may not be entirely undervalued, its current price level presents a unique opportunity for growth. The recent whale activity, combined with favorable profitability metrics and positive technical indicators, points toward potential upside. Polygon’s future price trajectory seems promising, with key resistance levels indicating the possibility of significant price appreciation. If the broader market continues to rally and long-term holders stay committed, POL could be primed for further gains in the coming months.