Polygon price has been in a free fall this year and is approaching its year-to-date low.

Polygon (POL) dropped to a low of $0.1800 on Friday, July 4, down over 76% from its highest point this year. This decline has erased more than $4 billion in value, with its market cap falling from nearly $6 billion to $1.88 billion.

Polygon could be on the verge of a breakout after the network flipped Ethereum (ETH) in terms of weekly non-fungible token sales. CryptoSlam data shows that NFT sales on the network jumped by 52% in the last seven days to $24 million, while Ethereum NFT sales fell by 5.7% to $23 million.

Polygon’s NFT volume was mostly driven by Courtyard, which recorded over $18 million in sales. Other top NFT collections on Polygon included DNS, with $4.9 million in sales, and OKX NFT Creation.

Polygon is also gaining traction in the stablecoin sector, primarily due to Polymarket. Artemis data shows that the stablecoin supply on Polygon rose by 8.5% in the last 30 days to $2.4 billion, while the number of transactions surged by 39% to 92.6 million.

Polygon’s main challenge is competition from other growing layer-2 networks. It currently holds a total value locked of over $1.2 billion, while the newly launched Unichain has already reached $1.16 billion. Base holds over $4.9 billion in TVL, and its monthly decentralized exchange volume has soared to over $28 billion.

Polygon price technical analysis

The daily chart shows that Polygon price is gradually forming a double-bottom pattern at $0.1500, with a neckline at $0.2755, its highest level in May this year. This neckline is slightly below the 23.6% Fibonacci retracement level.

POL has also formed a falling wedge pattern, a popular bullish reversal setup, defined by two descending and converging trendlines. These lines are nearing convergence, which may lead to a bullish breakout.

If a breakout occurs, the initial target is the neckline at $0.2755, representing a potential 53% gain from the current level. However, a drop below the double-bottom support at $0.1500 would invalidate the bullish outlook.