Polygon (POL) Price Prediction 2023-2024: Will POL Recover From the Bearish Trend?

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.

Polygon (POL) price continued its downtrend on Monday, dropping by 12% in 24 hours to trade at $0.457 at press time. This drop came amid a 33% spike in trading volumes, which reached $248 million, according to CoinMarketCap.

Polygon has been facing bearish pressure, with the price declining by about 33% in the last 30 days. This performance has had a negative impact on wallet profitability, with the percentage of wallets in losses surging to 91%.

When many wallets are in losses, it causes negative market sentiment that results in further price declines. Furthermore, holders might choose to sell to minimize their losses, leading to 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 showed that the token was oversold. This metric dropped to a value of 23, which was 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).

RSI oversold, ADX rising on POL/USDT four-hour chart. Source: TradingView

But, if the selling pressure eases as buyers consider the oversold RSI an ideal entry point, it could lead to 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 substantially. In the last 24 hours, these volumes soared by 18% to $244 million and hit the highest level in six days.

dApp volumes on Polygon飆升至六日高点. Source: DappRadar

But, despite this increase, transactions had dropped to below $1 million while the number of Unique Active Wallets (UAWs) also declined.

Moreover, Polygon’s monthly dApp volumes are still down by 37%, suggesting that the long-term outlook remains bearish.

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.

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.