Polygon's Accumulation Phase Intensifies – Will THIS Trigger a Rally?

As Polygon's [POL] exchange reserves plummet and active addresses flourish, the market shows signs of stabilization, suggesting a potential rally. Key trading indicators also point towards an optimistic shift, making it essential for investors to stay informed about the evolving trends.

Key Takeaways

Decreasing Reserves: Polygon’s reserves on exchanges have significantly dropped since mid-October, indicating a tighter supply and heightened accumulation activity.
Market Stability: The presence of Taker Buy dominance and the cooling of liquidations imply that the market may be gearing up for a breakout.
Price Levels: The price of Polygon is currently fluctuating between $0.21 and $0.17, with strong support around $0.18, hinting at bullish potential.
Bullish Indicators: The narrowing MACD indicator suggests a possible bullish crossover, which could stimulate momentum.
Liquidity Insights: Key liquidity regions at $0.19 and $0.18 present potential entry points for traders, enhancing the likelihood of price reversals.

Polygon accumulation phase deepens - Will THIS spark a rally?

Is a Breakout Close?

Polygon's price remains contained within a descending channel ranging from $0.21 to $0.17. Frequent rebounds at lower levels emphasize the strength of buyers. The green zone around $0.18 is crucial, acting as a significant accumulation area where buyers continually uphold support.

Currently, the MACD indicator indicates a tightening gap between its signal line and its MACD line. This could signal an early bullish crossover that may lead to upward price momentum. Should the price break above the descending trendline, we could see a movement towards $0.25 and potentially $0.29. However, if the support at $0.17 weakens, short-term downward pressure might arise before any sustained recovery is noted.

Polygon price action
Source: TradingView

Bullish Sentiment in Derivatives

Recent data from the futures market indicates a dominance of Taker Buy activity over the last 90 days, suggesting buyers are maintaining control even during minor corrections. This trend illustrates growing confidence among spot traders who are accumulating at lower prices.

Moreover, this reflects an early positioning by institutional investors in anticipation of a wider market recovery. An emphasis on buyers typically suggests a stable price environment following extended declines, further supporting the prospects of a trend reversal.

Source: CryptoQuant

Key Liquidity Zones Identified

Data from CoinGlass' liquidation heatmap indicates significant activities around $0.19 and $0.18, areas where leveraged traders have faced substantial squeezes. These regions often represent short-term liquidity pools, which can trigger price reversals when the leveraged pressure subsides.

The limited liquidation buildup below $0.175 further suggests that downside volatility is decreasing, implying that this current range could serve as a solid base for consolidation. If buying momentum continues to absorb sell orders, the token could stabilize above $0.19, potentially using this liquidity area as a launchpad for upward movement.

Source: CoinGlass

Is a Recovery Likely for Polygon?

All indicators point towards Polygon's tightening supply, vibrant network activity, and sustained buyer dominance, suggesting that a rebound may be on the horizon. As volatility decreases and key support levels remain intact, the token appears to be moving from an accumulation phase towards a breakout. A decisive close above $0.21 could confirm the onset of the next bullish phase for Polygon.