- Polygon’s Ahmedabad hardfork boosts network activity with a 20.59% rise in active addresses.
- Despite bullish fundamentals, exchange inflows and a 57.93% short ratio signal caution ahead.
Polygon’s [POL] recent upgrade, the Ahmedabad hardfork, is creating excitement as it successfully launched on the mainnet.
With the implementation of critical protocol enhancements through PIP-30, PIP-36, and PIP-45, Polygon aims to increase contract sizes from 24 KB to 32 KB and improve the plasma bridge’s efficiency.
At press time, POL’s price sits at $0.4346, a 3.88% surge in 24 hours, reflecting a positive market reaction to these upgrades. Will these improvements drive sustained growth, or is the market enthusiasm temporary?
On-chain data: Bulls are in motion
The on-chain data offers crucial insights into the effects of the Ahmedabad hardfork. Active addresses saw a 20.59% increase over the past 24 hours, now reaching 2,112. This rise suggests that the network is experiencing heightened engagement.
Additionally, transaction counts skyrocketed by 79.78%, with 2,910 transactions recorded within the last day according to CryptoQuant.
Consequently, the increased activity demonstrates the network’s improved usability and scalability, which has encouraged more participation. Therefore, the hardfork appears to have stimulated significant network growth.
Source: CryptoQuant
Exchange netflow: A red flag?
However, despite the encouraging on-chain data, exchange netflow reveals a more cautious outlook.
According to CryptoQuant, the net deposits to exchanges surged by 4,693.89%, totaling 59,628.38 POL at press time, signaling potential selling pressure.
Historically, large deposits often precede significant sell-offs, indicating that some investors might be preparing to take profits after the recent price surge.
Consequently, this suggests that caution is necessary in the days ahead as selling pressure could increase, impacting the token’s short-term performance.
Source: CryptoQuant
Long/short ratio: Bears still lurking
Furthermore, the long/short ratio adds another layer of complexity to the situation. Currently, 57.93% of traders are short, while only 42.07% are long.
Therefore, despite the bullish on-chain activity, many market participants remain wary of a potential correction.
The market sentiment reflects uncertainty, and traders may hedge their positions in anticipation of a pullback.
Source: Coinglass
Bulls in charge, but stay vigilant
The Ahmedabad hardfork has undeniably driven a positive response for Polygon. Therefore, the surge in active addresses, transactions, and price reflects strong fundamental growth.
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However, with significant exchange inflows and bearish sentiment in the futures market, caution is still warranted.
The bulls appear to hold the upper hand, but investors should remain vigilant, as a short-term correction could still be on the horizon.
