Polygon price is at risk of a significant drop after forming a bearish technical pattern—despite growth in its decentralized finance and stablecoin activity.
Polygon (POL) token was trading at $0.2355 on Thursday, a few points below this week’s high of $0.2765.
DeFi Llama data shows that the amount of stablecoins in its ecosystem has continued to rebound this month. Stablecoin supply has risen to $1.98 billion, up from the year-to-date low of $1.67 billion. Meanwhile, a report by Messari noted that the stablecoin supply on the network jumped by 23% in the first quarter, while the number of active stablecoin wallets rose by 30%. DAI holds a 47% market share on Polygon, followed by USD Coin (USDC) and Tether (USDT), with 31% and 13% shares, respectively.
Additional data shows that total value locked on the Polygon network is making a slow recovery. TVL stands at $1.03 billion, up from the year-to-date low of $736 million. Growth has been even more notable in POL terms, with the figure rising to 4.35 billion POL from 1.86 billion POL in January.
Nansen data also shows that the number of weekly transactions on Polygon rose by 9% to 19.27 million, higher than Arbitrum’s (ARB) 12 million.
Decentralized exchanges transactions on Polygon rose by 48.46% in the last seven days to almost $1 billion.
Polygon’s main challenge is that it has continued to lose market share to newer layer-2 networks like Unichain, Base, and Arbitrum. For example, Unichain, which was launched in February, handled over $3.8 billion in transactions.
Polygon price technical analysis
The daily chart shows that POL bottomed at $0.1500 in April and then rebounded as the broader crypto market rallied. The token has nearly retested key resistance at $0.2863, the lowest level from November last year.
However, the coin has slowly formed a rising wedge pattern, defined by two upward-sloping and converging trendlines. This pattern often signals a potential bearish breakdown when the price nears the point of confluence.
If a breakdown occurs, Polygon could fall to the next support level at $0.1504, the April low, which is about 40% below the current price. A decisive move above the $0.30 resistance level would invalidate the bearish outlook.
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