- Layer 2 altcoin MATIC recently crashed to a yearly low similar to 2022.
- A seasoned cryptocurrency analyst has come up with a bullish theory for MATIC under one condition.
- On-chain indicators show that despite a slight bounce, there is not enough buying pressure.
Popular Layer-2 blockchain Polygon (MATIC) recently dropped out of the top 20 cryptocurrencies by global market cap. Despite having made several deals with big names like Google, Nike, Disney, Coca-Cola, and Starbucks, MATIC’s reputation is now overshadowed by its dismal recovery efforts.
Why MATIC’s Rebound Rally Hasn’t Started
MATIC hit its yearly bottom last week, falling to $0.355 on August 5, 2024. It was a brutal day for the general cryptocurrency market, with all major market cap coins seeing double-digit losses. While some altcoins successfully bounced back a week later, Polygon remained stagnant as the consolidation phase lasted longer than most holders had anticipated.
Some experienced crypto traders have been waiting for this MATIC price drop. In a technical chart analysis published by crypto analyst Endless Grind, the 2022 bear market low was highlighted as a desirable entry point. MATIC briefly fell below the $0.40 resistance level on August 5 and 7, 2024, before successfully converting the $0.40 price barrier into support.
However, several on-chain metrics are showing signs of stagnation, with MATIC’s on-balance volume (OBV) dropping to a two-year low. This negative signal, which has dropped from -369M MATIC tokens in early 2024 to -1.438B today, shows that buying pressure on this altcoin is weak. Another indicator used to measure current momentum, Chaikin Money Flow (CMF), has also remained below 0 on the daily cryptocurrency chart.
How Polygon’s strength theory could unfold
Polygon’s 2022 yearly bottom was almost retested on August 5, 2024, but several traders interpreted the price action as a possibility of history repeating itself. MATIC 2022 hit $1.25 in November, bouncing back from below $0.40 in just 5 months.
Veteran crypto analysts like Ali Martinez see the recent MATIC price drop as the perfect setup for a similar bull run “if altcoin season starts.” With MATIC “about to melt its face,” Martinez warns the crypto audience that a weekly close below $0.30 would invalidate historically based bullish theories.
The 28th alternative cryptocurrency, Polygon, is trading at $0.42 and has seen a 1.2% gain in the last 24 hours. Looking away from the daily chart, it is clear that MATIC is still nursing its wounds from a 22.3% monthly decline, as the bulls have not been able to regain control.
On the other side
- According to real-time data from IntoTheBlock, only 2% of current Polygon holders are profiting at this price.
- Layer-2 altcoins have large holders, up to 86%, which can potentially cause centralization issues.
Why this matters
Originally called Matic Network, Polygon’s blockchain has become one of the leaders in global cryptocurrency adoption with numerous deals with real-world brands.
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