- MATIC could drop to $0.68 regardless of the upcoming update.
- Holders have an average gain of 31.85%, but it’s not time to go long.
Like most cryptocurrencies, Polygon [MATIC] has experienced a significant price drop over the past seven days. At the time of writing, MATIC was changing hands at $0.72, down 16.39% in the past week.
However, the disappointing price action hasn’t stopped Polygon Labs from going ahead with its plans. On January 24, Polygoon Posted that it would launch the “AggLayer” in February.
Liquidity is no guarantee of a price increase
For the uninformed, the team describes AggLayer as a way to unify cross-chain liquidity in the ecosystem. The project also noted that the AggLayer would be an integral part of Polygon 2.0 which has been in the works for some time.
But will the development bring about any change for MATIC? Well, in some cases, such developments offer a positive response from the native tokens. Others, however, lead to downward movements or sideways movements.
From a technical point of view, MATIC risked another decline. This was based on the indications of the Exponential Moving Average (EMA).
At the time of writing, MATIC was below the 20 EMA (blue) and 50 EMA (yellow). While the 20 EMA was at $0.73, the 50 EMA closed at $0.76. The crossover is considered bearish. Thus, MATIC could fall below the $0.70 region in the near term.
Furthermore, the Relative Strength Index (RSI) stood at 42.50 at the time of writing. The indicator’s inability to reach the 50.00 midpoint suggests that the presence of buyers was not enough to boost MATIC upwards.
If sellers continue to dominate the market, MATIC’s next move could end at $0.70. However, the Moving Average Convergence Divergence (MACD) had turned negative. This indicated that bullish momentum could soon return in MATIC’s favor.
Source: TradingView
If that happens, MATIC could retest $0.75. But if the MACD value does not grow, a decline of just $0.68 could be plausible.
“Not nearly the mark”
Additionally, on-chain data from Santiment showed that the market value to realized value (MVRV) ratio had increased to 31.85%. This ratio evaluates the tops and bottoms of a cryptocurrency.
It also shows the average profit/loss of all tokens in circulation. So the above ratio means that if all MATIC holders were to sell, they would make an average profit of 31.85% on their purchases.
Read Polygon [MATIC] Price prediction 2024-2025
At the same time, the increase does not seem good for the price action. This is because it shows that the market is a bit overheated. So it may not be a good time to open long MATIC positions.
Source: Santiment
However, if the price of MATIC falls, the MVRV ratio would also follow suit. Should this be the case, traders should be on the lookout for spot trade entries or find a position to long the token.