Polygon (POL): Is $0.18 the Next Catalyst for a Breakout or a Setup for a Correction?

Polygon (POL), the native token of the Ethereum Layer-2 scaling solution, has long been a focal point for investors navigating the volatile crypto market. As of late 2025, the token's price action around the $0.18 level has sparked intense debate: is this a critical resistance threshold that could trigger a bullish breakout, or a psychological barrier that signals an impending correction? Drawing on technical analysis and on-chain metrics, this article dissects the dynamics at play.

Technical Analysis: A Mixed Bag of Signals

The $0.18 level has historically acted as a psychological resistance point for POL. In late 2025, the token briefly rallied to this level, driven by the launch of Polygon's Open Money Stack and a surge in active addresses to a three-month high. However, the price was rejected here, flipping short-term momentum bearish. Technical indicators underscored this bearish shift: the Relative Strength Index (RSI) dropped below 50, confirming seller dominance, while the Money Flow Index (MFI) declined to 54.44, signaling fading inflows. A rising wedge formation on the 4-hour chart accelerated the drawdown, and the Chaikin Money Flow (CMF) remained positive but declining, suggesting waning accumulation.

Conversely, broader timeframes paint a more nuanced picture. The price remains above key Fibonacci and Murrey Math levels, with the 50-day and 100-day exponential moving averages (EMAs) providing bullish support. A strong bull run in early 2026 pushed POL from a January 1 low to $0.18 by January 11, fueled by a 98% surge in trading volume and a 167% spike in 24-hour volume. Yet, a breakdown below $0.15 could expose deeper support levels at $0.13 and $0.10, with analysts warning that failure to convert $0.18 into support would validate a bearish scenario.

On-Chain Behavior: Deflationary Pressures and Network Growth

Polygon's on-chain metrics in late 2025 reveal a deflationary tailwind. Daily token burns reached record levels, with approximately one million POL burned per day in early 2026, reducing the circulating supply by over 3.5% in 2025 and early 2026. This deflationary trend was amplified by infrastructure upgrades like the Madhugiri hardfork, which increased throughput to 1,400 transactions per second, and growing staking participation.

Network activity also surged, with over 1.4 billion transactions processed in 2025 and $2.8 billion in stablecoin supply recorded by year-end. The Open Money Stack announcement in January 2026 acted as a catalyst, positioning Polygon as a cross-chain infrastructure for global payments. This drove POL's price from $0.10 in late December 2025 to $0.19 in early January 2026, with transaction volumes peaking at $312 million in a single day.

However, the price's consolidation near $0.17–$0.18 in late 2025 suggests caution. The RSI and Supertrend indicators signal consolidation rather than a breakout, and a break below $0.1700 could expose support levels at $0.1550 and $0.1434.

Order Book Dynamics: Buyer Dominance vs. Seller Resilience

Order book data highlights a tug-of-war between buyers and sellers. In early January 2026, buy volume surged to $114.6 million, outpacing sell volume ($110 million), and maintaining a positive buy-sell delta. The RSI climbed to 77, nearing overbought territory, while the DMI Stochastic Momentum Index (DMI-SMI) and TSI indicators supported continued upward momentum.

Yet, sellers remain a potent force. The price's rejection at $0.18 in late 2025 triggered a 14% drop, with technical indicators like the MACD histogram showing weakening bullish momentum. Analysts caution that a breakdown below $0.15 could extend the correction toward $0.13, particularly if broader market conditions deteriorate.

Future Outlook: AggLayer Upgrades and Institutional Adoption

Polygon's long-term trajectory hinges on the adoption of its AggLayer v0.3 and v0.4 upgrades, which aim to enhance scalability and interoperability. These upgrades, coupled with partnerships like Stripe, Revolut, and Mastercard, could reinvigorate bullish sentiment. The chain's 52% share of omnichain USDT supply as of Q3 2025 further underscores its role in institutional cross-chain liquidity.

However, short-term volatility persists. Price predictions for 2026 range from $0.1105 to $0.1392, with bearish sentiment reflecting broader crypto market dynamics. A 2x rally scenario is contingent on sustained migration progress and ecosystem growth, but competition from other Ethereum Layer-2 solutions remains a headwind.

Conclusion: A Pivotal Level for Polygon

The $0.18 level represents a critical inflection point for Polygon. While technical indicators and on-chain metrics suggest a deflationary and structurally robust ecosystem, the price's repeated failure to break above this resistance raises concerns about near-term bearish pressure. Investors must weigh the potential for a bullish breakout-driven by AggLayer adoption and institutional partnerships-against the risk of a deeper correction if sellers regain control. For now, the $0.18 level remains a watchpoint, with its resolution likely to shape Polygon's trajectory in early 2026.