POL surged significantly over the last 24 hours as Ethereum investors moved funds into the asset
Market analysis revealed that the rally could soon stall due to resistance levels and selling pressure from other market segments
Polygon [POL] rallied by double-digits on the charts, gaining by 10.43% to trade at $0.2065 in the last 24 hours.
And yet, data suggested that the rally could be capped. Especially as sellers begin to dominate both spot and derivative markets, betting against further upside.
Ethereum investors fuel POL’s rally
The latest surge in POL’s price was primarily driven by a cross-ecosystem liquidity injection, according to Artemis.
In fact, Total Bridge Netflow data, which tracks the movement of funds across blockchains, revealed that Ethereum investors moved significant capital into Polygon over the last 24 hours.
Source: Artemis
At the time of analysis, over $10.4 million in net inflows had been used to purchase POL – A sign of strong demand for the asset.
Historically, such demand spikes tend to trigger uptrends, with the same highlighted by POL’s recent rally.
However, according to AMBCrypto’s analysis, the rally may be coming to an end soon.
No light at the end of the tunnel?
The POL/ETH chart, which tracks fund flows between the two tokens, revealed that POL attracted more capital during its price rally.
Interestingly, this northbound move coincided with a breakout from a descending channel – A typically bullish pattern. In previous instances, POL has rallied to the top of this pattern near $0.0000969 on the charts.
Source: TradingView
However, the Fibonacci retracement levels highlighted multiple resistance zones that could hinder further gains. A key resistance lay at $0.0000775 – A level that POL must overcome to maintain its upside on the charts.
Previously, the price action at this Fibonacci level has resulted in a sharp rejection, dragging POL/ETH to its recent low towards the end of June.
A similar rejection could lead to range-bound trading between $0.0000775 as resistance and $0.0000705 as support.
Retail investors want POL lower?
At the time of writing, spot and perpetual market data hinted at weak bullish conviction among traders.
According to Coinalyze, the Open Interest in the perpetual market surged by 12.25% to $100.7 million in the last 24 hours alone. This alluded to an uptick in trading activity.
Source: Coinalyze
However, the Funding Rate—which reveals trader sentiment based on whether it’s positive or negative—turned negative at -0.0011. What this implied was that a majority of market participants have been opening short positions.
Meanwhile, the spot market has been seeing more sell-side activity too. In fact, CoinGlass data revealed that traders offloaded $1.2 million worth of POL in just 24 hours.
Source: CoinGlass
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