As demand for the altcoin Polygon (MATIC) diminishes among market participants, there's a looming risk of extending its losses. Should bearish pressure intensify, MATIC is anticipated to prolong its existing downtrend, potentially pushing its value below the $0.65 mark.
MATIC is trading at $0.67 at the time of writing, marking a notable 13% price decrease over the past month. This decline in the value of the altcoin can be attributed to a consistent decrease in demand in recent weeks.
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Analyzing data using a 30-day moving average, the count of daily active addresses engaging in at least one MATIC transaction has steadily declined since April 20. As of May 12, this count stood at 356,000, reflecting a 16% reduction in the number of addresses involved in MATIC transactions during the month.
Source: Santiment
The period under review has also witnessed a notable decrease in demand for MATIC. MATIC’s Network Growth monitors the daily number of new addresses created for MATIC trading and has exhibited a downward trend since April 20.
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Source: Santiment
Over the period from April 20 to May 12, new demand for MATIC declined by 15%. A decrease in an asset’s network activity signifies a reduction in market participants buying and selling the asset, resulting in decreased trading volume. With fewer traders active in the market, liquidity diminishes, exerting bearish pressure on the asset’s price.
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MATIC's Price Outlook: Insights from RSI and Price Trends
At the time of writing, MATIC’s Relative Strength Index (RSI) indicated a preference among market participants for token distribution over accumulation, as it resided below the neutral line of 50.0. The RSI, functioning as a momentum oscillator, gauges the speed and magnitude of price movements.
Typically ranging from 0 to 100, RSI levels above 70 suggest overbought conditions, while below 30 indicate oversold conditions. With an RSI of 39 and in a downtrend, MATIC reflects a scenario where selling activity surpasses buying activity amid declining demand for the altcoin.
Source: BeInCrypto on TradingView
At $0.67, MATIC's price currently hovers above a significant support level that has undergone multiple tests. However, with a decrease in new demand for the altcoin, it now faces vulnerability in maintaining this support level.
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According to readings from its Fibonacci retracement, should the aforementioned bearish sentiments gain traction, MATIC's price trajectory might dip below $0.65, potentially leading to a drawdown to the support level at $0.62. Nevertheless, a shift in market sentiment coupled with a surge in buying pressure could propel MATIC towards a recovery beyond $0.68, thereby challenging the prevailing bearish outlook.
What MATIC's Price and Market Sentiment Tell Us
MATIC's Relative Strength Index (RSI) suggests a prevailing sentiment among market participants favoring token distribution over accumulation, as it remains below the neutral threshold of 50.0. Acting as a momentum oscillator, the RSI provides insight into the speed and magnitude of price movements. With MATIC's RSI at 39 and in a downtrend, indicative of selling activity outweighing buying activity amid declining demand for the altcoin, bearish sentiment prevails.
Despite trading at $0.67, MATIC's price stands above a crucial support level that has proven resilient through multiple tests in the past. However, the altcoin's dwindling demand poses a risk to its ability to maintain this support level. Analysis from its Fibonacci retracement suggests that if bearish sentiments gain momentum, MATIC's price trajectory could dip below $0.65, potentially leading to a drawdown to the support level at $0.62.
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Conversely, a shift in market sentiment accompanied by a surge in buying pressure could propel MATIC towards a recovery beyond $0.68, thereby challenging the prevailing bearish narrative. Therefore, while the current indicators point towards a bearish outlook for MATIC's price, the potential for a reversal exists should market sentiment shifts in favor of accumulation over distribution.
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