The price of MATIC, the cryptocurrency that powers the prominent Layer-2 blockchain Polygon, has experienced a substantial drop from its peak of $1.22 on March 14. After a period of consolidation from April 14 to June 7, the token fell below the lower boundary of its horizontal trading channel and has since plummeted by 33%.
What’s Driving the Decline?
An on-chain analysis of MATIC’s price action has shown a marked decrease in altcoin demand among market participants. This decrease is evidenced by the token’s Price-Daily Active Addresses (DAA) Divergence, which currently sits at a negative value of -35.59%. This metric compares price movements with changes in the number of daily active addresses and has not exceeded zero since October 24, 2023.
A negative Price-DAA Divergence value suggests a drop in active addresses engaging with the asset, indicating bearish market sentiment. Coupled with MATIC’s price decline, this data highlights reduced network activity on Polygon.
Can MATIC Recover?
Furthermore, MATIC’s Relative Strength Index (RSI) stands at 21.17, indicating the asset is oversold. The RSI, ranging from 0 to 100, suggests that a value below 30 could mean a price recovery might be imminent, though the prevailing bearish trend could hinder this potential rebound.
As the downtrend continues, MATIC’s price may keep tumbling. The Elder-Ray Index, which measures the balance of power between buyers and sellers, has been negative since June 7, indicating strong bearish control. Currently, its value is -0.15, suggesting further declines unless there is an increase in buying pressure.
Investor Insights
Key Takeaways:
- MATIC’s Price-DAA Divergence at -35.59% signals diminished network activity.
- The RSI of 21.17 suggests the token is oversold, but recovery prospects are uncertain.
- The Elder-Ray Index remains negative, indicating strong bearish control in the market.
- Potential price targets include a drop to $0.42 or a rise to $0.49 with increased buying.
In conclusion, the continuous bearish trend and significant decline in network activity suggest that MATIC’s price may face more downward pressure in the short term. Investors should closely monitor these technical indicators for potential recovery signals or further drops.