Polygon (MATIC) has recently fallen below the crucial support level of $0.5 and is at risk of further price declines. This price drop is due to several traders selling their tokens as soon as Polygon reached this support level amid the downtrend in the broader crypto market.
Polygon is facing significant selling pressure
The Exchange-Onchain market depth indicator on the market information platform InHetBlok shows what Polygon is currently dealing with significant selling pressure. More than 90 million tokens were sold after the coin reached $0.5. This indicator tracks the order books of the top 20 exchanges and shows the average price at which traders are willing to buy and sell the token.
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Polygon bulls were unable to defend the crucial $0.5 support level as further data from IntoTheBlock shows that just over 55 million tokens were purchased at an average bid price of $0.49. In the meantime, Polygon is at risk of further price declines, with data from IntoTheBlock showing that sell orders still exceed buy orders.
The positive thing about this wave of sell-off is that Polygonal whales seem to have maintained their faith in the MATIC token and have taken advantage of this price drop to accumulate more tokens. Data from IntoTheBlock shows that net flows from large holders have increased by more than 1,700% over the past seven days, indicating accumulation among these investors.
Only 3% of Polygon holders are currently in the money, which could lead to further price drops for the crypto token. If the crypto token doesn’t recover quickly enough, the 96% of investors currently in losses could cut their losses at some point, triggering another wave of sell-off for MATIC.
Thanks to bearish price action, Polygon recently dropped out of the top 20 crypto rankings by market cap. Facts from CoinMarketCap shows that it is currently the twenty-first largest crypto token by market capitalization, after Litecoin.
Market conditions do not make things easier for MATIC
The Current situation in the broader crypto market have also contributed to Polygon’s recent decline. Bitcoin recently fell from $69,000 to a low of $63,500 altcoins down in the process. Tokens like MATIC have experienced larger price drops due to their strong positive price correlation with Bitcoin.
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The flagship crypto has experienced this price drop thanks to the rising tensions in the Middle East, with Iran and Israel leading the way. however, the market is expected to pick up speed again soon enough, meaning that tokens like MATIC could enjoy a huge rebound sooner or later. The first goal will be for the crypto token to regain the crucial $0.5 support level.
At the time of writing, Polygon is trading around $0.48, down almost 2% in the past 24 hours, according to facts from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com