Analyst Says Polygon (POL) Token Is Not a Good Buy Right Now, Here’s Why

Polygon (POL) is showing some signs of life and it could be worth evalutaing how high it could go this cycle. A video from Gerhard from the Gerhard Bitcoin Strategy YouTube channel breaks down what is happening with Polygon, what the charts are saying, and whether POL is worth buying now.

Gerhard points out that the POL and MATIC tokens are interchangeable, and that the new POL token is just a migration from MATIC. Both tokens are linked and their prices move together. The conversion is one-to-one but this new version has stirred up some concerns. The reason is that POL brought back token inflation. Even though MATIC was supposed to have a fixed supply of 10 billion, the move to POL changed that. Now, more tokens are being released again, especially to validators and the community treasury.

Polygon’s Early Hype Is Fading

Polygon was once one of the biggest Ethereum layer 2 solutions. When Ethereum gas fees were very high, MATIC became the go-to option for cheaper transactions. That early advantage brought a lot of hype. But today, the competition is fierce. Projects like Arbitrum, Optimism, and Base are now offering the same thing. According to Gerhard, MATIC has underperformed Ethereum by 93% since February 2023. That is a steep drop for a token that used to be among the most watched in crypto.

Even after that underperformance, Polygon still holds a large market cap. When you combine POL and MATIC, the value is around $2.5 billion. That makes it the second-largest Ethereum layer 2 project behind Mantle. Gerhard questions whether that valuation makes sense. Smaller projects have lower valuations and some even show better growth potential. Polygon still carries a premium price, and the market seems unsure about whether it deserves that spot.

Polygon’s Niche in Betting Markets Could Be Its Edge

Despite the concerns, Gerhard highlights that Polygon may have found a specific use case. The network seems to be thriving in the area of betting markets, especially with platforms like Polymarket. Other chains have found their own niches too. Ethereum dominates in DeFi. Solana is popular for meme coins. Polygon, it seems, is carving out its own lane. Gerhard shows that trading volume, stablecoin market cap, and total value locked on Polygon are slowly increasing. These small wins may help the project stay relevant.

When it comes to short-term price movement, Gerhard looks at things like funding rates and open interest. The funding rate for POL is currently positive. That means traders are paying to go long, which is usually a good sign. But open interest on MATIC is still low. Around $100 million is not much for a token of this size. Gerhard says if open interest increases significantly, the price could rise faster. For now, though, there is not much excitement in the market.

Token Inflation Is Still the Core Problem

Gerhard expands on a bigger issue in crypto. He argues that token inflation is what causes many altcoins to lose value. As more tokens are released, often going to insiders and early backers, the pressure to sell increases. Retail investors usually end up holding the bag. He criticizes how influencers and VCs profit from early allocations while most users are left with losses. According to him, this structure makes it difficult for altcoins to compete with Bitcoin and Ethereum over time.

Instead of chasing the next big altcoin, Gerhard recommends a different strategy that focuses on relative valuations. By going long on Ethereum and short on weaker altcoins like Balancer or MATIC, he creates a chart that grows steadily over time. He has used this method for nearly four years and says it beats just buying Bitcoin. Recently, he has done this using perpetual futures, starting with $40,000 and growing it to nearly $60,000 in under three months. It is not guaranteed to continue, but it has worked so far.

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What POL Needs Before It Becomes a Smart Buy

Gerhard does not give a fixed price prediction for POL. Instead, he focuses on market structure and timing. Right now, he believes POL is still overvalued. If the price drops by another 30% to 50% compared to Ethereum, and if user activity continues to rise, it could become a much better buy. But at the current market cap, the upside is limited unless adoption really takes off.

Gerhard’s analysis suggests that POL is not yet in bargain territory. While the token has potential, especially in betting markets, its high valuation and past underperformance make it a risky bet for now. He encourages investors to wait for better entry points and to consider smarter strategies that do not rely on hype or timing alone. In his view, using the structure of the market rather than emotion or guesswork is what puts the odds in your favor.

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