Polygon (MATIC) Network Activity Spikes Despite POL Token Struggling Under Bearish Pressure

POL (formerly MATIC) has been under bearish pressure after dropping by nearly 20% in 30 days. As AMBCrypto reported, more than 98% of POL holders are sitting on losses

Cryptocurrency prices have been volatile in recent months, and Polygon (MATIC) has not been spared from the downturn.

As reported by AMBCrypto, over 98% of MATIC holders are currently in the red, highlighting the negative market sentiment.

At press time, MATIC was trading at $0.324. According to data from CoinMarketCap, trading volumes had dropped by 5%, suggesting waning interest among traders in the altcoin.

However, despite the price decline, the Polygon network has seen a surge in activity, particularly in decentralized finance (DeFi).

Polygon DeFi TVL hits 7-month high

At press time, Polygon’s DeFi Total Value Locked (TVL) stood at $1.164, as per DeFiLlama. The TVL is at its highest level since March, indicating increasing usage for DeFi applications built on the network.

Meanwhile, DeFi volumes have gradually increased to $267M at press time. The last time that Polygon’s DeFi volumes were at these levels was also in March.

(Source: DeFiLlama)

The top application contributing to this surge is the Polymarket betting site, which accounts for $354M of the network’s TVL.

This month alone, Polymarket’s TVL has nearly tripled, with the upcoming U.S. elections being a driver for this growth.

Despite this positive data, the MATIC token continues to display bearish signals.

MATIC forming a rounding top pattern

On the technical front, Polygon appears to be coiling up for a rounding top pattern. This is a bearish reversal pattern that suggests MATIC is cooling off from its bullish trend as selling pressure gradually increases.

MATIC will complete the rounding top pattern if it drops to test support at $0.31.

Should MATIC establish this neckline and breaches this support, it could create a sell signal that could send prices plummeting lower.

(Source: Tradingview)

Technical indicators hint at further downward momentum. The Chaikin Money Flow (CMF) has a negative value of -0.21, indicating that the selling pressure is higher than the buying pressure.

The Relative Strength Index (RSI), which has a reading of 42, also points towards bearish momentum.

The RSI is also tipping south, indicating that selling activity is increasing. If buyers fail to step in, it further reinforces the bearish thesis around MATIC.

Polygon derivatives show THIS

The derivatives market shows more bearish signs around MATIC. Despite the 8% surge in volumes, open interest had dropped by 3% to $49M at press time.

This drop shows that derivative traders are closing their existing positions on MATIC.

The reduced market participation also indicates a lack of conviction among traders in MATIC’s future price movements.

(Source: Coinglass)

The long/short ratio at 0.88 shows that short positions are more than long positions, further highlighting the bearish sentiment. However, on Binance, there are more traders with long positions than short positions.

Is your portfolio in the green? Check out the MATIC Profit Calculator

The bias towards short positions could be attributed to an influx of liquidations. In the last 24 hours, more than 90% of the liquidated trades have been short positions.

Despite the retail market showing a bearish sentiment towards MATIC, institutions or smart traders remain bullish per Market Prophit.

(Source: Market Prophit)

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