Polygon (MATIC) price appears to have hit a roadblock at the $1.15 resistance. Among other on-chain factors, the profit-taking wave among whales and MATIC’s current overbought status pose fresh bearish concerns. Will the Polygon native coin slip below $1 again?
On March 27, Polygon announced the mainnet launch of its native zkEVM, a Layer 2 (L2) scaling solution for the Ethereum network that leverages the zero-knowledge proofs. The move attracted media attention and expert plaudits. But a week later, on-chain data suggests crypto investors are unconvinced that the product launch will translate into considerable price gains.
MATIC Whales Remain Pessimistic
Despite the recent product update, Polygon whales have remained pessimistic. According to data compiled by Santiment, the cluster of crypto whales holding balances of 100,000 to 100 million have been in a sell-off frenzy since mid-February. Between Feb. 19 and April 5, this strategic whale cohort depleted their holdings by 45.81 million coins. Polygon (MATIC) Whales Accumulation, April 2023. Source: Santiment
Over the last three months, the buy/sell pattern of the whales mentioned above has been highly correlated to price action. The red line in the chart above depicts how the whales started booking profits once the Polygon price hit $1.53 on Feb. 17. If the trend is not reversed, MATIC holders can expect more downside in the coming weeks.
Furthermore, the uptrend in Network Value to Transaction Volume (NVT) ratio currently also confirms this bearish signal.
The NVT ratio is a metric used to determine the valuation of a cryptocurrency network relative to its current transaction volumes. It is calculated by dividing the total market capitalization of a cryptocurrency by its daily transaction volume. The Glassnode chart below shows that the Polygon NVT ratio has increased considerably in the past week. Between Mar 29 and April 5, it spiked from 42.27 to 529.85. Polygon (MATIC) Network Value to Transaction Volume (NVT) ratio, April 2023. Source: Glassnode
A high NVT ratio suggests that market capitalization is relatively high compared to transactional activity. This implies that MATIC is overvalued around current prices and may be due for a correction.
Rounding up, the bearish combination of a high NVT ratio and an ongoing sell-off frenzy among large investors means that MATIC holders may take a hit in the coming days.
MATIC Price Prediction: Another Retracement to $1 is likely
IntoTheBlock’s aggregate of limit orders placed on exchanges shows that MATIC could soon slip below $1. As shown below, MATIC will have considerable support at around $1.09. At that zone, there the bulls have placed orders for 3.6 million coins. If that buy-wall fails to keep the bears at bay, then MATIC could slide toward $0.95, where the next significant support of 6.97 million coins lies. Polygon (MATIC) Aggregate Order Books, April 2023. Source: IntoTheBlock
However, the bulls can gain ground if MATIC can flip $1.20. But this is hard done as a considerable sell-wall of 3.3 million coins will likely impede the rally. If that does not happen, then MATIC could proceed toward $1.38, where another group of holders is looking to sell 6.76 million coins.