Polygon drops 12% in a day – But here‘s why POL’s sell-off may be near exhaustion

Polygon [$POL] has shed roughly 12% over the past 24 hours, deepening a 25% loss on a year-to-date basis, yet this latest leg lower looks driven by panic selling rather than any real break in the networks fundamentals.

Data from both the Spot and perpetual markets point to a clear misalignment between $POLs underlying positioning and its price outcome over the past day alone, the kind of gap that rarely holds for long.

$POLs selling pressure shows signs of running its course

The Spot and derivatives picture suggest the recent selling, while real, is closer to exhaustion than to building into a fresh wave of downside, and the funding and flow data are where that case starts to take shape.

CoinGlass data shows $POLs perpetual contract Funding Rate has held in positive territory, with a reading of 0.0036%. A positive figure indicates that long positions still dominate the market and that traders are paying to keep those bets open.

Roughly $48.54 million in Open Interest is currently concentrated in favor of further upside even as the token sells off.

Source: CoinGlass

The Spot market tells a similar story. Buyers have outpaced sellers over the past day, judging by $POLs net movement away from centralized exchanges. To put the scale on it, the exchange netflow stood at $494,000 in net outflows at the time of writing.

When netflow supports a bullish outlook in this way, it often marks the early signs of a swift recovery and leaves room for a sharp bounce back, as supply moves off exchanges and out of immediate selling range.

$POL holders keep building positions through the slide

New holders have continued to enter the market over this period, even as the asset has extended its decline rather than recovered.

The tokens holder count has kept expanding through the downturn, climbing to 138,100 according to the latest reading from CoinMarketCap, a sign that the selling has not deterred fresh participation.

Source: CoinMarketCap

That said, the figure marks only a modest increase on the prior days level, with roughly 150 new holders adding $POL to their portfolios, and there is no certainty over whether this group leans toward short-term trading or longer-term holding.

Community sentiment offers a hint at where they sit, rising to 74%, the share of investors bullish on $POL at the moment. A continued climb among this group could see them hold onto their $POL through the volatility, lending support to the tokens overall price stability.

Why $POL is down today

$POLs decline at the time of this report stems from the sell-off that took hold on the 5th of May. According to CoinGlass, the primary driver behind the move is panic selling rather than any deterioration in the network itself.

The Long/Short Ratio, which gauges whether traders are net buyers or sellers, currently places $POL in selling territory below 1. This means that the prior sessions selling volume still weighs on the token even as it works its way out.

Source: CoinGlass

A contraction in Open Interest while Funding Rates stay positive points to traders pulling back to shield open positions from liquidation, with total market liquidations over the day reaching $548,570.

Final Summary

• $POLs drop reflects panic selling rather than weakening fundamentals, with positive funding and exchange outflows hinting the sell-off may be fading.
• Holders have grown to 138,100 through the decline, and 74% bullish sentiment suggests conviction is holding.