POL's Prolonged Downtrend: Is There Any Short-Term Upside for Its Price?

POL has fallen 18.90% on the charts in the last week, with pessimistic sentiment prevailing. The asset has lost 1.15% in the previous 24 hours alone, reinforcing the bears' grip on the market.

However, AMBCrypto's investigation found that POL's current decline may not be ended. Especially given the asset's potential for further losses in the short term.

Can a Bullish Pattern Signal a Reversal for POL's Downtrend?

At the time of writing, POL was trading in a falling channel, a pattern in which prices fluctuate between two key levels: support and resistance.

The price was trying a support level at 0.4731, located in the middle of the channel, with additional support at 0.4583 below it.

Typically, this would signal a significant upward recovery. However, a closer inspection reveals that the asset has stuck at this level, with no upward momentum.

Further investigation by AMBCrypto revealed that current on-chain data weakens the likelihood of a rally since exchange reserves have increased, implying that the potential for a reversal is restricted.

POL Faces Increased Risk with Growing Exchange Availability  

The volume of POL available on exchanges has increased dramatically. According to CryptoQuant, Exchange Reserves increased to about 57 million, up approximately 2 million from the previous day.

Such an increase often suggests that traders transfer their POL holdings back to exchanges, increasing supply. Such fluctuations frequently precede sell-offs, which might send the price of POL lower on the charts.

Furthermore, the number of active addresses has continued to fall, presently at 1,231. This decline implied decreased activity, with fewer addresses influencing price change. A decrease in active addresses often indicates a lack of Interest in the asset, which is frequently linked to declining investor trust.

Meanwhile, data from IntoTheBlock suggested a significant decrease in average transaction size. While the seven-day average was $13,796.37, the 24-hour average fell to $4,908.63, its lowest point of the week.

This highlighted a considerable reduction in the value of POL being transacted, indicating a decline in market activity.

Together, these factors indicated a decline in investor interest, raising the prospect of continued downward pressure on POL's price.

Trader Encounters Closed Positions

Open Interest fell by 2.60% to $88.30 million. Such a decline indicated an increase in closed contracts as the market trended downward.

Similarly, liquidation data revealed a significant advantage for short traders, as the bulk of long contracts were liquidated. Long contracts worth $225,670 were closed in the last 24 hours alone, while short contracts only cost $58,380.