MATIC Faces Challenges Despite Rally; Investors Urged Caution
The Bottom Line
Polygon (MATIC) has recently experienced a notable rally, which is however facing challenges. The crucial support mark is at $0.5. An analysis of market data indicates that despite a short-term uptrend, there is a risk that the price will decline again. The current market structure and investor behaviour suggest that we need to prepare for significant developments.
Polygon’s Uptrend and Current Challenges
Polygon has put on an impressive performance over the past week by breaking through the local resistance mark of $0.43 and starting a rally to the higher timeframe resistance zone at $0.58. This movement was accompanied by an increase in open interest (OI), indicating a high bullish sentiment. Nevertheless, the price fell by 7.5% after reaching a local high of $0.5819, and the OI also declined.
Investor Behaviour and Potential Impacts
According to a report by IntoTheBlock, 54.72% of the addresses that bought MATIC between $0.456 and $0.62 are at a loss. This could mean that a price increase into the region of $0.552 to $0.569 could lead to a wave of selling as investors try to exit at break-even. However, the psychologically important mark of $0.5 could see increased buying activity.
Network Activity and Sentiment
The daily number of active addresses has declined over the past month, indicating reduced network adoption and demand for the token. At the same time, the weighted sentiment reached a high since May. Another indicator, the dormant circulation, showed a significant increase, which is often a precursor to upcoming selling activities.
Technical Analysis and Market Outlook
The technical analysis shows that the market structure is bullish after the recent increase. The indicators also favour buyers. Nevertheless, the zone from $0.56 to $0.58 represented a significant weekly resistance where MATIC was recently rejected. It is likely that the market will enter a consolidation phase around $0.56 to $0.58 before a move south towards $0.5 or $0.45.
Our Assessment
Polygon (MATIC) is at a critical point. Despite recent uptrends, the market structure, investor behaviour, and network activity suggest caution is advised. Investors should keep an eye on the support mark of $0.5 and watch for signs of consolidation or further decline. As always, it is important to follow market news and analysis to make informed decisions.
Sources: IntoTheBlock, Santiment
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