Massive liquidity outflows from POL in the past 24 hours could steer a price decline.
On the chart, POL could drop to its February low.
Polygon [POL] has had a bearish performance across multiple market periods. In the past month, it recorded a 34% price drop, which has extended into the past week, along with a 4.53% decline in the past 24 hours.
AMBCrypto’s analysis shows that the fall is likely to intensify as major market metrics have turned bearish, particularly as more liquidity moves out of the asset.
Massive liquidity outflow puts 99% of holders at a loss
In the past 24 hours, POL has recorded significant chain netflow compared to other chains, turning negative. A negative chain netflow means liquidity has been withdrawn from the chain, signaling bearish sentiment.
For POL, over $13.2 million worth of the asset has been sold and withdrawn from the chain. This high level of outflow points to heightened bearishness in the market and the tendency for a further decline.
AMBCrypto, however, noticed that this massive outflow has put a significant number of holders “out of the money.” At the time of writing, 99.73% of POL holders were at a loss, with only 0.27% of traders in profit.
The fear of further losses among holders could lead to a major sell-off from this cohort, forcing the asset’s price to decline further.
A path to $0.24 could be near
The selling pressure from market participants and the liquidity outflow could force a price decline, a path that’s evident on the chart.
Currently, POL is trading within a descending channel, with the price forming lower highs and lows.
If POL breaks down from the support level at $0.278, the asset could decline to the liquidity zone of $0.243, a low last reached on the 3rd of February.
If seller momentum is high, the asset could drop below $0.243, forming a new low as trading sessions progress.
Spot and derivatives traders align
The spot and derivatives markets are in alignment for a possible price decline.
In the past 24 hours, the derivatives market has been selling, as Open Interest fell by 1.29% to $78.41 million, while volume surged by 73.18% to $68.09 million.
When Open Interest declines and volume increases, it indicates strong selling pressure in the market, with high momentum behind it.
Exchange netflow reflects this sentiment, as $181,500 worth of POL has been sold over the last three hours, signifying that market participants have begun selling after a long stretch of buying.
