In recent years, blockchain technology has seen widespread adoption among individual and institutional users. On the back of such mainstream adoption, the Polygon chain has now taken center stage, outperforming all other major chains along the way.
Stablecoin transfers hit record high!
Since the U.S Congress passed the GENIUS Act, stablecoin use has become widely accepted as a means of payment.
In light of this perception shift, the Polygon chain has massively capitalized on this mainstream acceptance. In what is a major milestone for the chain, Polygon recorded 94 million stablecoin transfers recently – The highest among the market’s chains.
Source: Polygon
This surge in transfers was backed by 5.2 million stablecoin addresses, driving the total stablecoin supply to $3 billion.
Such a surge in stablecoin transfers is indicative of a hike in on-chain liquidity usage and trading activity. In fact, Polygon recorded over 32.2 billion in Adjusted Transaction volume too – More evidence of the aforementioned trading activity.
Source: Artemis
At the same time, the chain registered $1.49 billion in USDC supply – Another daily ATH.
Token burns hit 28.9 million!
In addition to stablecoin transfers, the 0xPolygon chain continues to generate significant revenue from the hike in usage. According to Neganweb3, for instance, the chain saw $4 million in fees over the last 30 days and $140k in the last 24 hours.
Typically, higher revenue usually indicates that the chain has been seeing real demand, with users actively transacting too.
Source: Polygon
From the generated revenue, the team has channelled it into the token burns now. In the last 24 hours, Polygon burned 3 million POL – Bringing the total burned to 28.9 million.
As the number of tokens burned increases, the circulating supply declines, effectively increasing scarcity. Often, greater scarcity accelerates momentum upwards – A prelude to higher prices on the charts.
Worth pointing out, however, that sustained higher scarcity still eludes POL. For example – The Stock-to-Flow Ratio (SFR) has continued to decline, hitting a low of 4.5 at press time.
Source: Santiment
Such a low SFR implied that even token burns have been insufficient to sustain higher scarcity.
In fact, most market participants have been active on the supply side, further increasing the supply available for immediate selling.
What are the price charts saying?
Despite an uptick in on-chain activity and token-burning measures, POL’s price has failed to move. Put simply, even higher network usage has failed to translate into demand for POL
On the contrary, POL has faced sharp downward pressure. At the time of writing, Polygon [POL] was valued at $0.092, down 2.76% on the daily charts on the back of 42% monthly decline.
As a result of the prolonged bearish streak, POL held on below both its short and long-term moving averages, including the 20-, 50-, 100-, and 200-day EMAs.
Source: Tradingview
Finally, the altcoin’s Stochastic Momentum Index (SMI) fell deeper into negative territory, with a value of -38. The SMI in the negative zone suggested that downside pressure was dominant, with sellers commanding the market.
Usually, such a market setup signals the continuation of the prevailing trend. Therefore, if the trend persists, POL risks falling to $0.08-$0.09.
However, if on-chain activity translates into actual POL demand, driven by token burns, the altcoin could reclaim the EMA20 at $0.1082. A return to this critical level will signal a significant trend reversal, with $0.13 as the key resistance level.
Final Thoughts
- Polygon outperformed all other chains, recording 94 million stablecoin transfers and driving total stablecoin transactions to 32.2 billion.
- Despite rising on-chain activity, POL faced strong bearish pressure, falling by 42% in just 30 days.
