Polygon, the Layer-2 scaling solution, has experienced a significant drop of nearly 10% over the past 24 hours, continuing its downward trend for the third consecutive day. Despite this decline, a bullish reversal pattern has emerged on the daily chart, hinting at a potential rebound in the near future.
According to data from crypto.news, Polygon’s POL token is currently trading at $0.225, reflecting a 9.5% decrease over the past 24 hours, with a market cap of $2 billion as of Thursday, July 24. This decline, which amounts to a 13.46% drop from its recent peak in July, is likely attributed to profit-taking by investors following the token’s surge alongside Bitcoin and Ethereum in recent weeks.
Despite being 56% below its year-to-date high, recent developments within the Polygon ecosystem suggest a resurgence of interest from investors. The network has been gaining visibility, and there are indications that renewed investor interest could benefit the POL token in the long run.
Two significant developments within the Polygon ecosystem could potentially revive investor interest. Firstly, Polygon has been selected as the blockchain infrastructure behind BeToken, Spain’s first fully EU-regulated, on-chain security token offering. This move marks a significant step for real-world asset tokenization in Europe and could lead to increased tokenized securities, stablecoin activity, and on-chain settlements on the Polygon network, ultimately boosting demand for the POL token.
Secondly, sentiment around Polygon is expected to improve as Polymarket, an on-chain predictions market on the network, is set to return to the U.S. after acquiring a CFTC-licensed derivatives exchange. This transition to full compliance is likely to increase transaction volume, user engagement, and visibility for Polygon in the U.S. market.
On-chain metrics also support a positive outlook for Polygon, with the total market cap of stablecoins on the network experiencing an 8% increase, reaching $2.9 billion. This rise indicates growing user demand and liquidity within the Polygon ecosystem, which could contribute to a broader recovery for the POL token.
Furthermore, whale wallets have shown increased interest in the POL token, with a 33% rise in whale holdings over the past 30 days. Simultaneously, the total POL balance on exchanges has decreased by 4.5%, suggesting a potential decrease in selling pressure and paving the way for a potential upward movement.
Technically, on the daily chart, the POL token appears to be forming a double-bottom pattern, a bullish reversal signal typically observed after a prolonged downtrend. Additionally, a golden cross has formed, with the 20-day simple moving average crossing above the 50-day moving average, indicating a potential shift in momentum favoring the bulls.
If bullish momentum continues, a breakout above the neckline resistance at $0.2768 could confirm the pattern and lead to further upward movement. The projected price target based on the pattern’s depth suggests a potential upside of around 78% to $0.393. However, a decisive break below the key support at $0.20 would invalidate this bullish setup.
In conclusion, despite the recent downtrend, the emergence of bullish patterns, positive developments within the Polygon ecosystem, and supportive on-chain metrics indicate the potential for a rebound in the POL token’s price. Investors should keep a close eye on key levels and technical indicators to gauge the token’s future price movements accurately.
(Note: This article does not constitute investment advice and is intended for educational purposes only.)