Polygon (MATIC) is currently witnessing a notable upswing, registering a 30% rise in value over the past week. This upward trend is triggered by bullish investors within the protocol, who are aiming to attain new highs for the year. Nevertheless, as the price of MATIC approaches the $1 mark, there’s noticeable selling activity from investors. This situation poses a potential worry for traders, raising questions about whether this is a temporary market consolidation or a bull trap.
Exchange Reserve And Netflow Declined Suddenly
Polygon’s open interest (OI) has made a comeback, reaching a new high for the year by exceeding $387 million. According to Coinglass, Polygon experienced massive liquidations as its price neared $1. Recent data indicates that MATIC saw around $5 million in short positions being liquidated, along with $5.2 million in long position liquidations. This trend implies that while sellers were closing their positions at a loss, buyers were capitalizing on their investments, selling their holdings for a profit as MATIC’s price hit the $1 milestone.
However, for many investors, MATIC’s rise to $1 has been seen as an opportunity to accumulate more. Consequently, there has been a decline in both the Netflow and the exchange reserve. Data from CryptoQuant reveals a sharp decrease in the exchange reserve, now standing at approximately 1.1 billion MATIC.
Moreover, there was a shift to negative Netflow following MATIC’s surge to $1, indicating that investors were withdrawing their holdings, possibly in anticipation of further increases in value. This trend of accumulation hints at the potential for future price surges.
Despite this, the inflow has begun to rise again as MATIC faced challenges maintaining its position above $1, leading to a swing back to positive Netflow. This has resulted in a strong tug-of-war between buyers and sellers around the $1 mark.
What’s Next For MATIC Price?
MATIC successfully broke through the key resistance level of $1 after buyers defended the resistance at $0.96. However, MATIC recently met a correction as sellers intensified their domination. As of writing, MATIC price trades at $1.05, surging over 17% from yesterday’s rate.
Following this breakthrough, the bulls are maintaining their buying pressure, aiming to send the price towards a new high. However, $1.2 is expected to create substantial resistance from sellers. If the bulls manage to overcome this resistance and push the price above the fear region, the MATIC price would successfully gain buyers’ confidence. This bullish formation sets a potential target of around $1.6.
On the downside, the first level of support is now at $0.96, followed by the 20-day Exponential Moving Average (EMA) at approximately $0.94. For the bearish momentum to gain acceleration and challenge the bullish trend, the bears would need to pull the price below the $0.85 level.