POL Price Faces Potential 30% Correction Despite Rising User Activity

Key Takeaways

• On-chain data shows increased active addresses on the Polygon network in the last 24 hours.
• The token faces strong resistance as its price nears break-even levels for many holders in losses.
• POL trades within a descending triangle with weak support, indicating that it could drop to $0.28.

Polygon (POL) has suffered a brutal few months, with its price plummeting to an all-time low of $0.28 on Nov. 4.

This sharp decline has pushed about 94% of token holders into unrealized losses.

Despite the Polygon token price performance, the network has seen an increase in increased user engagement. However, on-chain and technical analysis reveals that this surge may not be enough to shield POL from a sharp correction.

Polygon Users Grow, but Sellers Are Waiting

CCN examines Santiment’s active address data to highlight the rise in user participation. Active addresses track the number of users sending or receiving cryptocurrencies on a network.

When this number rises, it indicates growing interest and activity. On the other hand, a decline shows waning engagement and low traction.

According to Santiment, Polygon’s active addresses dropped sharply on Jan. 30. However, as of this writing, the metric has risen, implying that more users have successfully made transactions on the Polygon network.

The rise in active addresses is a bullish sign that could drive a price increase. However, it might be challenging for the Polygon token price to experience sustained growth in this case.

One reason for this is the data from the Global In/Out of Money Around Price (GIOM). The GIOM classifies addresses and tokens into clusters to provide a view of the market’s profitability.

By revealing the volume of money lost or made at the current position, the GIOM can tell whether a price range offers support or is a resistance zone.

Typically, the bigger the cluster, the stronger the support or resistance. Based on IntoTheBlock data, the volume of POL in unrealized losses from $0.41 up to the all-time high of $2.82 is more than those currently in profits.

Due to this position, as the Polygon token price inches toward these levels, it might face high selling pressure. This is because holders might try to break even at their acquisition cost.

Should this be the case, the POL might experience a pullback that could erase part of the 45% hike it attained from November lows.

POL Price Prediction: Another Decline Coming

From a technical standpoint, the Awesome Oscillator (AO) on the daily chart remains stuck in the positive region. The AO measures momentum using recent and historic price movements.

Positive values of the indicator signify bullish momentum. Therefore, the negative reading shown below indicates that the momentum around the POL is bearish.

Beyond that, the Polygon token price continues to trade within a descending triangle, which is a bearish pattern.

Combined with the Relative Strength Index (RSI) position below the neutral line, POL’s price risks falling below the flat support line of the bearish pattern.

If validated, then the Polygon token price could drop by 30% to $0.28 again.

However, this trend might change if POL sees an increase in demand. In that scenario, the cryptocurrency’s value might rally toward  $0.67.

If the broader market condition improves, this target could be higher, and the token could rise to $1.