The cryptocurrency market is currently experiencing a downturn, and Polygon (POL), a prominent layer-2 scaling solution for Ethereum, has not been immune to the bearish sentiment. A prominent crypto expert on X (formerly Twitter) has predicted a significant price drop for POL, potentially reaching as low as $0.23, representing a 44% decline from its current trading price. This prediction is based on several technical indicators and on-chain data that paint a concerning picture for the short-term outlook of POL.
One of the key indicators pointing towards a potential price drop is POL’s position relative to the 200 Exponential Moving Average (EMA) on the daily timeframe. The 200 EMA is a widely used technical indicator that represents the average closing price over the past 200 days. Trading below this moving average is generally considered a bearish signal, suggesting that the asset is in a downtrend. In POL’s case, its current price is below the 200 EMA, confirming the bearish sentiment.
Further reinforcing the bearish outlook is the Relative Strength Index (RSI), another popular momentum oscillator that measures the speed and change of price movements. The RSI oscillates between 0 and 100, with values above 70 generally considered overbought and values below 30 considered oversold. While POL’s RSI is currently hovering just above the oversold territory, this doesn’t necessarily signal an imminent rebound. In fact, the expert interprets this as an indication that there is still ample room for the price to decline further before reaching a potential bottom.
This pessimistic outlook appears to be shared by investors and long-term holders of POL, as on-chain data reveals a significant outflow of tokens from their wallets to exchanges. According to Coinglass, a prominent on-chain analytics firm, exchanges have witnessed an inflow of $2.56 million worth of POL in the past 24 hours. This movement of assets from private wallets to exchanges is typically interpreted as a sign of potential selling pressure, as investors position themselves to liquidate their holdings. Such increased selling pressure can exacerbate the price decline, creating a negative feedback loop.
Despite a minor price surge of over 2.75% in the past 24 hours, pushing POL’s trading price near $0.40, the overall market sentiment remains bearish. The trading volume during this period has also decreased by 15% compared to the previous day, suggesting lower participation from traders and investors. This reduced trading activity can be interpreted as a lack of confidence in the current price level, further supporting the possibility of a continued downtrend.
In summary, the confluence of technical indicators like the 200 EMA and RSI, coupled with on-chain data revealing increased inflow to exchanges and declining trading volume, paints a bearish picture for Polygon (POL). The expert’s prediction of a 44% price drop to $0.23 seems plausible given the current market dynamics and investor sentiment. However, it’s important to remember that cryptocurrency markets are inherently volatile, and predictions, even from seasoned experts, are not guaranteed. Investors should exercise caution and conduct their own research before making any investment decisions. It is crucial to consider various factors beyond technical analysis, including fundamental analysis of the project, market sentiment, and overall macroeconomic conditions, to make informed investment decisions.
