The cryptocurrency market is currently witnessing a surge in excitement as Bitcoin hits its highest level in years, positively affecting the price of the altcoin Polygon (MATIC), which has soared by over 57% in the past month. The price of MATIC has seen a notable increase despite various challenges, reaching $1.12 at the time of reporting. In contrast to Bitcoin, MATIC met significant resistance throughout February. However, persistent investor support has propelled the digital currency to its highest valuation in almost a year.
Potential Impact of Increased MATIC Supply
The potential for a downturn in MATIC’s value arises as the altcoin faces mounting selling pressure. The quantity of MATIC stocked on exchanges has surged by 100 million in just 12 days, totaling 1.2 billion MATIC. This uptick in exchange-held supply often suggests an impending wave of sales. Moreover, such an increase can signify profit-taking during price rallies, indicating that some investors might be preparing to capitalize on gains amid fears of short-lived bullish trends.
Whale Activity Raises Concerns
The threat to MATIC’s value ascension may stem from volatile whale investors known for their swift trading maneuvers. The concentration of MATIC among these large stakeholders has escalated from 3.9% to 7.8% in a fortnight, with their holdings valued at approximately $782 million. Should these whales decide to cash out for profits, MATIC could confront formidable resistance to further appreciation and might even face a downturn on the daily chart.
MATIC is on the cusp of challenging a key resistance level at $1.18. This threshold has been a historical support and could precede a climb over $1.20. Bitcoin’s recent peak of $68,359 on Monday provides additional momentum for MATIC due to its strong correlation with BTC. This could lead to further gains for MATIC, but it must first breach and maintain support above the $1.18 mark to avoid a potential fall back to lower support levels.
If MATIC is unable to cross this hurdle, a retreat to a support level of $1.05 may ensue. Failure to sustain above this line could render the altcoin susceptible to a further drop to $0.95, negating the current bullish outlook.