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- MATIC’s exchange supply has been steadily increasing.
- However, market sentiment showed slowing demand among retail investors.
The recent surge in Polygon (MATIC) supply on cryptocurrency exchanges may not be due to actual demand for the token in the general market. In a new report, anonymous CryptoQuant analyst Joao Wedson found:
“Recently, we have witnessed an unusual scenario in which the price of MATIC rose significantly and the reserves held by the exchange also increased significantly. However, upon closer analysis of this situation, it becomes clear that price movements may not be directly aligned with the public interest.”
The token’s value has risen 18% in the past month due to a rally in exchange supply. Meanwhile, Wedson’s assessment of general market sentiment revealed:
“There appears to be no clear correlation with public interest or a proportional increase in organic demand.”
With regards to the group of MATIC holders driving the rally, the analyst cited a “theory” that this could be due to an accumulation of tokens on cryptocurrency exchanges.
Wedson said:
“The theory is that the possibility that the recent surge in Matic is closely related to the accumulation of coins on exchanges is gaining ground. This suggests that the upward price momentum may have been driven more by internal exchange strategies rather than a significant increase in demand from retail investors.”
Low demand from spot traders
Evaluating MATIC’s performance on the 24-hour chart, we found that the accumulation has been steadily decreasing since November 12th.
Additionally, the values of Relative Strength Index (RSI) and Money Flow Index (MFI) were fixed below the center line. At press time, RSI and MFI stood at 50.05 and 39.48, respectively.
The values of these key momentum indicators show that token sales are far outpacing token accumulation among day traders.
Additionally, MATIC’s Moving Average Convergence/Divergence indicator (MACD) confirmed the bearish sentiment permeating the market.
Source: MATIC/USDT on TradingView
Read Polygon (MATIC) Price Prediction for 2023-24
Open interest in the futures market has also steadily decreased. According to data from Coinglass, MATIC’s open interest has steadily decreased by 21% since November 16th.
A decrease in open interest in an asset means that traders are liquidating existing positions. This is done as a way to make a profit or as a hedge against potential loss.