Nov 28, 2024

6thTrade

Polygon (POL) may have room for growth, as whale activity suggests potential upside following a 20% price pullback.

Whale Activity & POL’s Discounted Opportunity

In the past 48 hours, Polygon whales have seized the opportunity presented by a 20% discount on POL, purchasing 59 million tokens. This move aligns with the growing momentum in the altcoin market. While this whale activity is significant, it’s worth noting that the 59 million POL tokens represent only a small fraction of the total supply, which exceeds 10 billion POL tokens.

Is POL Undervalued for Further Upside?

Looking at the Market Value to Realized Value (MVRV) ratio, the 30-day and 180-day MVRV readings were positive at 35% and 44%, respectively. This indicates that investors who’ve held POL over the past month and six months are sitting on unrealized profits of +30%. Even after the recent 20% pullback, these profits remain largely intact, suggesting that short-term holders might be inclined to sell and lock in gains.

However, a deeper look at POL holder profitability reveals that the short-term holders—those in profit—account for only 10% of the total POL holders. In contrast, over 85% of addresses (+500K users) are still underwater. Less than 4% of holders (23,000 users) are at break-even. The fact that the majority of holders are at a loss could support POL’s potential upside, as many are likely to hold on until they can recover their initial capital, rather than selling at a loss.

Price Action & Upside Potential

On the price chart, POL shows room for further growth, with low On Balance Volume (OBV) indicating minimal selling pressure. Previous analysis by AMBCrypto suggested that if POL breaks above $0.6, it could signal a stronger recovery. A decisive move above $0.8 could mark the continuation of the uptrend, with the 50-61.8% Fibonacci levels aligning with this price point.

If POL targets a potential high of $1.2, as seen in March, the coin could see nearly 160% in potential gains.

Conclusion

Whale activity and the positive MVRV data suggest that POL could be undervalued, with significant upside potential. While short-term holders may lock in profits, the majority of holders are still at a loss, which could lead to further buying pressure and continued upward momentum for Polygon in the coming months.