Polygon teeters on edge of 40% plunge—DeFi hype and stablecoin surges can’t mask the looming bear trap

MATIC’s recent ecosystem wins get overshadowed by ominous technicals. Traders are bracing for impact as descending triangles and whale wallets flash classic ’rug pull’ signals.

DeFi TVL up? Check. Stablecoin adoption growing? Sure. But when the suits on Wall Street start ’diversifying into crypto,’ you know it’s time to check your stop-losses.

Nansen data also shows that the number of weekly transactions on Polygon ROSE by 9% to 19.27 million, higher than Arbitrum’s (ARB) 12 million.

Decentralized exchanges transactions on Polygon rose by 48.46% in the last seven days to almost $1 billion. 

Polygon’s main challenge is that it has continued to lose market share to newer layer-2 networks like Unichain, Base, and Arbitrum. For example, Unichain, which was launched in February, handled over $3.8 billion in transactions. 

Polygon price technical analysis

The daily chart shows that POL bottomed at $0.1500 in April and then rebounded as the broader crypto market rallied. The token has nearly retested key resistance at $0.2863, the lowest level from November last year.

However, the coin has slowly formed a rising wedge pattern, defined by two upward-sloping and converging trendlines. This pattern often signals a potential bearish breakdown when the price nears the point of confluence.

If a breakdown occurs, Polygon could fall to the next support level at $0.1504, the April low, which is about 40% below the current price. A decisive move above the $0.30 resistance level WOULD invalidate the bearish outlook.