Key Takeaways
POL has seen outflows both on-chain and off-chain, adding to the market’s bearish sentiment. However, on-chain activity shows weakness as existing users churn while new users drop off.
Polygon [POL] declined 6% in the past day, continuing on its bearish path after recording a 46% fall over the past year.
Sentiment remained weak as liquidity outflows, both on-chain and on exchanges, intensified during this period. AMBCrypto examines what could come next for POL.
Liquidity outflow affects POL
Liquidity outflows have been consistent, both on-chain and off-chain.
According to Artemis, Polygon recorded a net outflow totaling approximately $105,900. This implies that investors are bridging their POL and reallocating into other assets that they believe will be more profitable.
The same trend plays out off-chain, with liquidity outflow dominating spot exchanges. In the past day, $263,000 worth of POL was sold.
Source: CoinGlass
Likewise, the derivatives market reflects the same bearish outlook, as Open Interest (OI) declined with $9.88 million worth of positions closed in the past day.
A continued outflow across all market segments like this will increase downward pressure on POL’s price and drive further market decline.
On-chain activity remains weak
On-chain activity has remained weak. According to Artemis, POL has recorded a week-over-week decline in active addresses.
At the time of writing, weekly active addresses had fallen to 2.2 million. Weak activity from these addresses impacts price as less POL is being utilized, resulting in reduced demand.
Source: Artemis
Similarly, there has been a notable decline in liquidity from new users adopting POL, showing a lack of interest in the asset.
At the time of writing, new users stood at 99,000 after only a slight rebound in the past day.
If sentiment—particularly with on-chain adoption—continues trending lower, it could add more POL supply to the market, putting further strain on price.
Chart skew still bullish
Despite the negative sentiment, the chart suggests that a rally remains possible. POL has dropped into a key demand zone between 0.2318 and 0.2264.
This zone has triggered rallies for POL three times since August. On its fourth test, the price has shown signs of a bullish recovery, suggesting a possible rebound.
Source: TradingView
However, this zone may fail to hold if selling pressure persists. Support levels often weaken after repeated tests, which could mean there are not enough buy orders left to counter continued sell-offs.
