Polygon [POL] experienced a significant surge in onchain activity and a corresponding price rally in early January, driven by heightened demand that led to record token burns and an uptick in single-day fees. This initial momentum briefly placed short-term holders in profit, with the token peaking around $0.1866 before encountering a projected supply zone. However, this surge proved unsustainable, leading to a notable price correction and a deeper dive into the network's underlying health.
Unpacking Polygon's Early January Surge and Subsequent Pullback
The early January rally saw a dramatic spike in Polygon's onchain metrics, including daily active addresses and transaction counts. This period of intense activity suggested robust demand for POL. Yet, within a couple of weeks, this enthusiasm waned considerably. Active address counts, network growth, and transaction volumes have all receded to levels observed in December, signaling a sharp reduction in demand. Consequently, POL's price has fallen by over 33% from its January high, trading around $0.1245, illustrating the volatility when speculative surges lack sustained fundamental support.
Divergent Holder Behavior Signals Mixed Outlook
Analyzing holder behavior during this period reveals a nuanced picture. The Mean Coin Age and 90-day Dormant Circulation metrics indicate that short-term holders capitalized on the early January bounce, taking profits as the price rose. This profit-taking pressure likely contributed to the subsequent price decline. In contrast, the 1-year Dormant Circulation remained largely undisturbed, suggesting that long-term Polygon investors maintained their conviction and did not participate in the selling. More recently, an upward trend in Mean Coin Age since mid-January hints at a potential network-wide accumulation phase, though significant capitulation from short-term holders has yet to be observed. For the network to experience another rally, a renewed uptick in onchain activity and demand for POL will be crucial, with traders closely monitoring the $0.12 support level.
