- Polygon’s DeFi TVL has surged to a 7-month high of $1.16 billion.
- Despite the network growth, POL still showed bearish signals with a rounding top pattern on its four-hour chart.
As a seasoned crypto investor with battle-scarred fingers from too many bear markets and bull runs to count, I find myself in a peculiar position regarding Polygon (POL). On one hand, the network’s DeFi Total Value Locked (TVL) is at its highest level in seven months, which is undeniably exciting. The surge in activity, especially on the Polymarket betting site, is a testament to the robustness and scalability of the Polygon network.
POL (formerly MATIC) has been under bearish pressure after dropping by nearly 20% in 30 days.
According to a report by AMBCrypto, over 98% of Polygon (POL) token holders currently find themselves in the red zone due to unfavorable market conditions, indicating widespread pessimism among investors.
As I examine the current market situation, at this moment, Polygon (POL) is being traded at a price point of $0.324. Delving into the data from CoinMarketCap, it appears that trading volumes have dipped by approximately 5%. This intriguing observation hints at a potential decrease in trader engagement towards the altcoin, indicating waning interest in the crypto market.
Despite the price drop, the Polygon network has recorded a surge in activity, especially in decentralized finance (DeFi).
Polygon DeFi TVL reaches 7-month high
At the moment of reporting, Polygon’s DeFi Total Value Locked (TVL) was $1.164 billion, according to DeFiLlama. This TVL figure marks a new peak since March, indicating an increase in usage for decentralized finance applications developed on this network.
Concurrently, decentralized finance (DeFi) transaction volumes have been steadily increasing to reach approximately $267 million currently. It’s worth noting that the last time Polygon’s DeFi volumes reached such a level was back in March as well.
The primary factor fueling this increase is a betting platform called Polymarket, responsible for approximately $353 million of the network’s Total Value Locked (TVL).
This month, the total value locked in Polymarket has almost tripled, primarily driven by the upcoming U.S. elections serving as a significant factor fueling this expansion.
Despite this positive data, the POL token continues to portray bearish signals.
POL forms a rounding top pattern
It seems like Polygon might be preparing for a rounding top formation, which is typically a bearish reversal signal. This pattern indicates that Polygon could be slowing down from its bullish run as the amount of sellers in the market steadily grows.
POL will complete the rounding top pattern if it drops to test support at $0.31.
If the POL sets this neckline and breaks through its support, it might trigger a sell signal that could potentially cause the price to fall further.
Based on technical analysis, signs point towards potential continued market decline. Specifically, the Chaikin Money Flow (CMF) stands at -0.21, indicating that there’s more selling activity occurring compared to buying activity.
In simpler terms, the Relative Strength Index (RSI) currently standing at 42 suggests a strong downward trend or bearish movement in the market.
The Relative Strength Index (RSI) is also pointing downwards, suggesting an uptick in selling actions. If purchasers don’t intervene, this trend could lend more support to the bearish perspective on POL.
Polygon’s derivatives data shows THIS
In simpler terms, the trends on the futures market suggest a pessimistic outlook regarding the stock of POL. Although trading volumes increased by 8%, the number of outstanding contracts (open interest) decreased by 3% to approximately $49 million at the current reporting time.
This drop shows that derivative traders are closing their existing positions on POL.
A decrease in trader involvement suggests that they’re uncertain about the direction of POL’s price changes ahead.
In simpler terms, the 0.88 long/short ratio indicates a higher number of traders are holding short (negative) positions compared to long (positive) ones, suggesting a pessimistic outlook. Contrastingly, on Binance, there’s a greater proportion of traders who have taken long positions rather than short ones.
As an analyst, I’ve observed a noticeable inclination towards short positions in recent activity. This trend might be attributed to a significant surge of liquidations over the past 24 hours. In fact, approximately 90% of the liquidated trades during this period were short positions.
Despite the retail market showing a bearish sentiment towards POL, institutions or smart traders remain bullish per Market Prophit.
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2024-11-01 00:40