Polygon (MATIC) rose on positive market reaction to Ethereum’s successful network update, but its long-term prospects remain uncertain and it remains to be seen whether the bulls will be able to avoid a significant correction
MATIC is the native token of the Polygon network, a popular second-level scaling solution for the Ethereum blockchain.
It helps reduce cost and speed up transactions with sidechains. These are separate blockchains that operate independently of Ethereum, but are connected to the main network.
Polygon also helps migrate decentralized applications (dApps) to a connected blockchain system.
BeInCrypto editorial said earlier this month that the surge in user activity on the network in March resulted in Polygon becoming the second most uniquely active wallets (UAWs) on the game blockchain.
You can read more about what blockchain games are in a special editorial.
The Ethereum network’s successful Shapella update had a favorable effect on MATIC’s rate in April, but the mood of the whales and the dynamics of the coin’s exchange moves warn that the token could soon dip below $1.
MATIC whales lose aggressiveness
In the week leading up to the Shapella upgrade, a cohort of cryptokits accumulated MATIC stocks. However, according to Santiment, the situation has now changed and their mood has shifted to neutral.
In anticipation of the Ethereum network upgrade, between April 5 and 12, large players with balances of 100k and more. up to 100 million MATIC, purchased 50 million coins worth about $51 million.
As a result, as you can see from the chart, the size of their reserves has been about 523 million coins since April 12.
As a rule of thumb, when whales stop buying, it can have a negative effect on the general mood of everyone else in the ecosystem as well.
MATIC hodlers getting ready to get rid of coins?
While the market is waiting for the whales to make their next moves, the influx of coins into trading platforms has begun to show a marked increase.
This could be a signal that MATIC hodlers may be preparing to sell some of their reserves.
While data from Glassnode shows that MATIC token inflows to exchanges increased by 4% in the last week. The volume of coins on exchange addresses swelled from 860 million to 893 million between April 10 and 19.
It is commonly believed that the withdrawal of cryptocurrencies from exchanges has traditionally been linked to investors’ desire to exit their long positions and/or take advantage of short-term trading opportunities.
Such increased selling pressure could trigger a price correction in the event of insufficient counter demand for the coin.
The two onchain indicators considered (whale behavior and token inflows on trading floors) could bode well for a possible decline in the MATIC exchange rate in tandem.
So, the two onchain indicators reviewed (whale behavior and token inflows to trading floors) could bode well for a possible decline in the MATIC exchange rate in tandem with the current broader downtrend in the crypto market.
Forecast: stabilization can be expected around $0.95
According to IntoTheBlock’s Global In/Out of Money Around Price (IOMAP) stats, MATIC could face a strong “buying wall” around $0.95, where the decline could be stopped immediately.
As a reminder, this metric tracks addresses that are approaching the breakeven level and reflects the distribution of hodlers along the average coin purchase price lines, thus highlighting areas of significant resistance and support.
As you can see from the chart, MATIC may lose current support at $1.10, although here 57k. addresses, owning 669,000.
Coins, may try to support the price of. Meanwhile, a break of this level would put the next $0.95 line of defense into play.
There are 50,000. addresses that bought 4.5 billion MATIC at that price.
In the meantime, the bulls will become more active in case the resistance area of $1.18 is broken, although the growth rate can restrain the 15 thousand. addresses with 578 million who may want to lock in profits.
A breakout of that level would target the next significant resistance of $1.29.