Polygon (POL) has recently captured market attention with a major deflationary move, burning an impressive 100 million tokens. This milestone comes amidst fluctuating price action, where the altcoin shows signs of short-term recovery, yet grapples with underlying inflationary pressures.
Deflationary Push: Polygon's 100 Million Token Burn
In a significant move to manage its supply and foster price stability, Polygon has announced the burning of 100 million POL tokens. This substantial deflationary event is designed to reduce the circulating supply, combat inflation, and potentially accelerate POL's upward price momentum. More broadly, sustained token burns are a strong indicator of robust network activity and increasing adoption, reflecting healthy network fees and rising revenue streams. Daily fees have stabilized above $200k, with application fees exceeding $500k, underscoring growing demand and participation within the Polygon ecosystem.
Immediate Price Bounce Amidst Bull-Bear Tug-of-War
Following the token burn announcement, POL experienced a modest 4.06% daily price increase, trading around $0.108 and successfully flipping its short-term EMA20. This uptick, backed by a 17% jump in trading volume, signals strengthening momentum and a bullish crossover on the Stochastic RSI. However, the market remains a battleground; while buyers show renewed interest, a significant seller presence persists. Bulls aim to secure a daily close above the $0.11 resistance level (EMA20 and EMA50) to target $0.12, but failure could see a retreat towards $0.106 as sellers look to cash out minor gains.
Persistent Inflationary Headwinds and Supply Pressure
Despite the substantial token burn, Polygon faces a critical challenge: stubbornly high inflation. Data from Santiment indicates a declining Stock-to-Flow Ratio (SFR) to 8.6, suggesting a lower scarcity and an increased immediate supply of POL tokens. This is further compounded by a surge in the altcoin's Exchange Supply Ratio (ESR) to a monthly high of 0.003, signaling a significant inflow of POL onto exchanges. This elevated supply on exchanges indicates that sellers are more active than buyers, creating considerable selling pressure and potentially accelerating downside momentum in the market.
