Polygon’s native token has performed poorly amid the crypto market downturn. A deep dive into on-chain data suggests that the MATIC price may experience more downswing, given the lack of retail interest. 

Polygon is a Layer-2 scaling solution designed to mitigate Ethereum’s throughput issues and exorbitant gas fees. Ethereum’s successful transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) appears to raise concerns about the Polygon ecosystem’s long-term viability.

On-chain data from Glassnode shows the volume of new addresses created on the Polygon network has steadily declined since December 2022. The downtrend now appears to have been exacerbated by the recent announcement of the Shanghai upgrade slated for April 12. 

After the early March resurgence, new daily addresses created on the Polygon blockchain entered another downswing on March 17, a few days after the Shanghai upgrade date was announced. 

Indeed, the number of new daily addresses on the Polygon network has declined 32% from the local high of 1,960 addresses created on Feb. 17 to 1,318 addresses as of March 21.   

A declining volume of new addresses on a blockchain network denotes dwindling interest in its core services and use cases. Consequently, the underlying token may struggle to find new demand. 

Similarly, crypto whales seem to be spooked. Data from Santiment shows that addresses holding 10 million to 100 million MATIC tokens have sold or redistributed around 43 million MATIC in the past month, worth about $55.9 million. 

Between Feb. 22 and March 21, this group of crypto whales depleted their reserves from 253 million to 211 million. Notably, a closer look at the chart shows that the buy and sell pattern of crypto investors holding between 10 million to 100 million MATIC has become closely correlated to price. 

IntoTheBlock’s Exchange Market Depth model provides a data-driven estimate of potential MATIC price movements in the coming weeks. It is a segregated aggregate of limit orders from token holders. It depicts key support and resistance zones with respect to current prices. 

The current bearish trend will likely be halted at 5% below the current prices. This falls at $1.03, with a formidable demand for 3.5 billion MATIC.

Still, failure to hold this demand wall could see the price of Polygon slide toward $0.90, where a buy-wall for another 1.2 billion MATIC sits.

Conversely, MATIC must cross above $1.14, where 138 million tokens are up for sale, to invalidate the pessimistic outlook. After that, the sell-wall of 1.35 billion MATIC at $1.30 will be the next resistance to beat. 

The post Polygon (MATIC) Price Fears Rise Among Investors Amid Crypto Market Slump appeared first on BeInCrypto.

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