Polygon’s [POL] attempted leg up collapsed as the altcoin faced rejection at $0.78. Since then, it has closed at two lower lows, falling to $0.753, indicating a shift in sentiment.
As of this writing, POL was trading around $0.757, down 2.46% on the daily charts. However, the altcoin’s trading volume climbed 18% to $35 million, indicating rising market activity, largely driven by sell-side activity.
Is Polygon driving the selling pressure?
It seems the market pressure has mostly arisen from selling activity from the Polygon team. The team has been aggressively selling POL, depositing 18 million POL worth $1.36 million to FalconX, with an average price of $0.0755, per Nazoku.
The latest transaction was two hours ago as of press time, with 8 million POL moved to FalconX.
Three days ago, the wallet deposited 6.79 million POL into FalconX. The deposit was after the wallet moved 20 million POL, worth $1.44 million, to a new wallet.
Over the past days, the team linked wallets and has been actively depositing, raising dumping concerns.
Bears are still dominating the market
Besides these transfers from the Polygon team wallet, Polygon is seeing rising pressure from other market participants.
On the spot, Polygon has recorded positive netflows throughout August so far. Over the past 24 hours, for example, Netflow exceeded $200k.
A positive Netflow suggests that more POL has flowed into exchanges, a clear sign of aggressive selling.
With sellers dominating through August, the supply on exchanges surged substantially. The Exchange Supply Ratio climbed from 0.000379 to 0.00042 and has remained elevated and hovering around this level.
Historically, elevated exchange supply has weakened the market, often leading to price pullback.
What’s next for the altcoin?
With POL facing a strong increase in selling pressure, the upside momentum has weakened, and it’s flipping bearish.
For starters, the altcoin’s Stochastic Momentum Index (SMI) formed a bearish crossover and fell to 47. A crossover here indicates sellers have become stronger and overwhelmed bulls.
This drop points to strengthening downside momentum. The Relative Strength Index (RSI) also confirms this flip.
The RSI dropped from 57 to 50 at press time. Although still holding within the neutral zone, the downward spiral indicates weakening upside and strengthening downside.
If the RSI drops below 50, it will validate the bearish structure and see Polygon record more losses. If it happens, so POL will fall to $0.70.
To invalidate this downside spiral, the altcoin needs to reclaim and see a daily close above $0.78.
Final Summary
- Polygon deposited 18 million POL worth $1.36 million into FalconX, raising potential dumping concerns.
- POL faced rejection at $0.78 and fell to $0.75, driven by increased profit realization.
