- Circulation is decreasing, indicating further upside potential for the token.
- Highly leveraged short positions can be liquidated between $0.89 and $0.96.
AMBCrypto has seen Polygon (MATIC) rise back above $1 after gaining 20% over the past seven days. At press time, MATIC was acquired for $1.005.
However, the recent milestone may not be the end for the token, as some on-chain indicators have hinted at further upside potential.
One of these indicators was circulation. Circulation measures the number of tokens participating in transactions within a specific period of time.
But when it comes to pricing, the metrics show something different. In most cases, an increase in circulating volume indicates selling pressure that can push the price of a cryptocurrency down.
Conversely, a decline in circulation could portend price stability or significant upside.
According to AMBCrypto’s Santiment analysis, seven-day circulation has been decreasing since December 27th.
Source: Santiment
Options from MATIC to $1.20.
If this decline continues, MATIC’s price could target a further 20% increase. In this case, the Polygon native token could reach $1.20 in the coming weeks.
When AMBCrypto looked at Polygon from a technical perspective, we observed that capital was increasingly flowing. At press time, the Funds Flow Index (MFI) was 87.58.
However, this reading means MATIC is overbought since the MFI reading is above 80.00.
This situation puts MATIC at downside risk. If the price retraces, the next targets could be around $0.88 and $0.92, where the 0.618 and 0.236 Fibonacci retracements are located.
Additionally, the Relative Strength Index (RSI) was consistent with MFI by indicating that the token was oversold.
However, the 20 EMA (blue) is above the 50 EMA (yellow), suggesting bullishness. In a very optimistic scenario, the price of MATIC could reach $1.20.
Alternatively, if bears dominate the market, the value could fall below $0.90. But that seemed unlikely in the short term.
Source: TradingView
Longs have a clear path.
AMBCrypto also analyzed liquidation heatmaps. For those unfamiliar, the Liquidation Heatmap shows price zones where overly leveraged traders can lose money.
At press time, data from HyblockCapital showed that highly leveraged positions could be liquidated between $0.89 and $0.96.
But look north and it’s a completely different story. The liquidation heatmap above $1.05 showed that buyers could still profit by targeting higher prices.
At the same time, it may be better to avoid using high leverage, especially since market conditions can change from bullish to bearish at any point.
Source: HyblockCapital
Is your portfolio green? Check out the MATIC Profit Calculator
It may not be a good idea to open a MATIC short position in the future. Despite predictions, Polygon native token may pull back before continuing its rise.
Therefore, like short selling, you must be careful when placing large bets.