Polygon (POL) teeters on the edge of a potential 40% breakout while Polygon’s TVL faces a 6.37% decline to $1.06 billion.

The price consolidation hints at a potential sharp move, but reduced ecosystem liquidity may challenge short-term growth.

Polygon (POL): Prepping for a 40% Move

Polygon was on the verge of a major price action between $0.41 and $0.47. This price range is in a descending triangle pattern, a technical setup that usually precedes sharp market moves.

Current subdued trading volumes point to an indication of market indecision but an impending breakout.

A break above $0.47 may see bullish momentum push further up to $0.56 and further beyond $0.68.

There would be a 40% upside hit at these levels in alignment with major Fibonacci retracement points.

– Advertisement –

However, if the price dips below $0.41, POL could fall to $0.32 or as low as $0.25, presenting a lot of downside risks.

Bearish pressures are also put in place by increased competition from other Layer 2 solutions and transaction volumes declining down to 3 million per day.

Polygon’s TVL Hits $1.06B: Resilient Despite a 6.37% Decline

Currently, the $1.06 billion TVL of Polygon places it among the top 10 blockchains. This figure is down 6.37%, but it still compares favorably with chains like Avalanche and Aptos.

Polygon remains buoyant despite general market challenges, thanks to its resilience, as evidenced by the network’s ongoing activity.

The recent TVL drop is moderate when compared to other networks,Tron, for instance, has dropped 14.5%, while Bitcoin is down 11.4%.

This decline may either indicate that the Bitcoin market is facing liquidity challenges or that users’ behavior has changed. Polygon’s extensive use cases and its adoption by major brands make it still relevant.

The strength of Polygon, however, lies in its ecosystem and the various protocols supporting such an ecosystem with its high staking activity.

Even after the slight TVL drop, the network holds its place as one of the major players in the decentralized finance space.

POL Volume and Open Interest Trends: December Peaks to January Lows

The trading volume of POL exhibits great fluctuations, of which December 5 received the highest activity worth $800 million.

But, as the coin price approached $0.80, investors’ interest also spiked. But the volume dropped steadily to $200–$300 million by mid-January.

These changes were then reflected in the token’s price. From the token’s price of $0.80 in December, the value was chopped to $0.41 – $0.47 in January.

With price stabilization alongside decreasing volume, the market looks hesitant to go one way or another. That means the traders are waiting till the momentum is strong enough before going in.

The only other commodity that saw eclipses of $100 million in open interest was POL’s futures, which hit a high of $200 million on December 8.

Increased speculative activity towards the end of the price surge gave the rising peak. After December 14, open interest then declined sharply, stabilizing in January between $80 million and $120 million.

Steady January levels indicate committed traders aren’t backing down, even though open interest dropped.

Such a move signals that a period of consolidation perhaps awaits before a new trend takes its shape.