Polygon liquidity pressure: Can POL hold support as selling pressure increases?

Polygon (POL) fell nearly 6% over the past week, continuing the bearish trend after recording a 46% decline over the course of a year.

Market sentiment remains weak as liquidity outflow ( both on-chain and across exchanges ) continues to increase during this period.

The outflow of funds affects POL

The capital is continuously escaping from the projects, both on-chain and off-chain. According to data from Artemis, Polygon recorded a net withdrawal of approximately $105,900, indicating that investors are transferring POL to the bridge and reallocating to other assets that they believe have higher returns.

A similar trend is occurring off-chain, with outflows dominating on spot exchanges. In the past 24 hours, $263,000 worth of POL has been sold.

Source: CoinGlassSimilarly, the derivatives market also reflects bearish prospects, as open contracts (OI) fell with $9.88 million in positions closed in the past 24 hours.

If the outflow of funds continues across all market segments like this, the bearish pressure on POL will increase and may pull the market down deeper.

On-chain activity remains weak

The on-chain activity of POL continues to be bleak. According to data from Artemis, the number of active addresses of POL has gradually fallen week by week.

At the time of writing, the number of active addresses per week has fallen to 2.2 million. Activity from these addresses has weakened, directly affecting the price, as fewer and fewer POL are being used, leading to a decrease in demand.

Source: ArtemisSimilarly, liquidity from new users participating in POL has also fallen significantly, indicating a lack of interest in this asset. At the time of writing, the number of new users has only reached 99,000, after recording a slight bounce in the past 24 hours.

If the market sentiment – especially the acceptance of on-chain continues to be bearish, this could lead to an increased supply of POL hitting the market, putting additional pressure on the price.

The chart still leans towards an uptrend

Despite the pessimistic sentiment, the technical chart indicates there is still a possibility of a recovery. POL has fallen to a key support zone around $0.231 – $0.226.

Since August, this area has triggered three recovery waves for POL. In the fourth test, the price showed a bullish recovery signal, suggesting the possibility of a rebound.

Source: TradingViewHowever, this area may not hold if selling pressure continues to increase. Support levels often weaken after multiple tests, meaning there may no longer be enough buy orders to counter successive sell-offs.

Minh Anh