Polygon (POL) Coin Retreated and Flipped a Key Support Level as Its Ecosystem Slowdown Persisted

Polygon (POL) dropped to $0.3910 on Tuesday, marking a decline of 47% from its December 2024 highs.

Polygon (MATIC) price continued sliding on Tuesday, reaching $0.3910 and marking a significant 47% drop from its December 2024 highs. Active addresses on the network also saw a 12% decrease over the past 30 days, reaching 5.96 million. This number is notably lower compared to Base, the largest layer-2 network, which recorded 21.7 million active addresses during the same period.

Despite Polygon handling 7% more transactions, reaching 91.5 million, its fee revenue saw a drastic 38% plunge, reaching $835,000. In contrast, Base processed over 218 million transactions and generated an impressive $15.5 million in fees.

Further analysis reveals the challenges faced by the Polygon network this year. The total value locked (TVL) in its decentralized finance (DeFi) ecosystem has seen a significant decline, reaching $842 million. This amount falls far short of the $3.41 billion and $3 billion locked in Base and Arbitrum, respectively.

Polygon's decentralized exchange (DeX) ecosystem is also lagging behind. Weekly trading volume dropped by 20% to reach $1.2 billion, while Base, a relatively new network, handled $10.7 billion in trading volume during the same period.

A similar trend is observed in the non-fungible token (NFT) market, where Polygon once had a strong presence. According to data from CryptoSlam, Polygon NFT sales saw a 71% decrease in the last 30 days, reaching $24.8 million, whereas Base surged with $22.7 million in sales, marking a 388% increase.

These underwhelming performances may explain why Lido DAO removed Polygon from its liquid staking offering in December.

Observing the four-hour chart, we can see that the POL token peaked at $0.7671 following its conversion from MATIC last year. Recently, it formed a descending triangle pattern, with its lower side at $0.4138. Notably, it failed to drop below that level several times since December last year. A falling triangle is typically regarded as a bearish chart pattern.

Moreover, Polygon dropped below its 50-period moving average, further reinforcing a bearish outlook. The path of least resistance appears to be downward, with the next key support level to watch at $0.3425, which represents the token's lowest swing on November 15.