- Polygon’s RSI has reached oversold levels after dropping to 23 amid intense selling pressure.
- 91% of Polygon wallet holders were in losses at press time, suggesting a bearish market sentiment.
Polygon [POL] is on a steep downtrend after dropping by 12% in 24 hours to trade at $0.457 at press time. Amid this drop, trading volumes spiked by 33% to $248M, per CoinMarketCap.
Polygon has been facing bearish pressure, as the price has declined by around 33% in the last 30 days.
This performance has had a negative impact on wallet profitability, with the percentage of wallets that are in losses surging to 91%.
When many wallets are in losses, it causes negative market sentiment that results in further price declines. Moreover, holders might choose to sell to minimize their losses, resulting in additional sell-side pressure.
As these bearish conditions persist, are there signs of a recovery, and could this trend reverse?
RSI shows Polygon is oversold
Polygon’s Relative Strength Index (RSI) on the altcoin’s four-hour chart shows that the token is oversold. This metric has dropped to a value of 23, which is its lowest since mid-December.
An oversold RSI usually precedes a correction to the upside. Moreover, looking at past trends, POL tends to start a rally whenever the RSI reaches oversold levels. As such, the altcoin could be poised for a recovery.
However, the Average Directional Index (ADX) is yet to confirm the end of the downtrend.
In fact, the ADX line is rising, an indication that the ongoing bearish trend is growing strong and POL could drop to the 1.618 Fibonacci level ($0.416).
Source: TradingView
However, if the selling pressure eases as buyers consider the oversold RSI an ideal entry point, it could result in a bullish reversal, pushing the price to $0.538.
dApp activity surges
Data from DappRadar showed that dApp volumes on the Polygon network have increased significantly. In the last hours, these volumes soared by 18% to $244M and hit the highest level in six days.
Source: DappRadar
However, despite this increase, transactions had dropped to below $1M while the number of Unique Active Wallets (UAWs) also dropped.
Moreover, Polygon’s monthly dApp volumes are still down by 37%, suggesting that the long-term outlook remains bearish.
Read Polygon’s [POL] Price Prediction 2025–2026
Long/Short Ratio shows bearish momentum
Polygon’s Long/Short Ratio showed that the momentum was bearish at press time after dropping to 0.885. This drop indicated that the number of short positions was slightly more than the number of long positions.
Source: Coinglass
Short traders tend to increase their bets when the momentum is bearish. However, an influx of short positions could increase the risk of a short squeeze that could result in forced buying activity.
