Polygon (MATIC), the cryptocurrency powering the Ethereum scaling solution, has defied the recent market sluggishness with a near 20% price increase since last Friday. This bullish run comes amidst a significant upcoming change for the project – the rebranding of its native token from MATIC to POL, effective September 4th.
The token swap will occur at a 1:1 ratio, with POL becoming the gas and staking token for the Polygon ecosystem. The team also hints at its potential use within their aggregation platform (AggLayer). This development has fueled speculation about MATIC’s ability to erase its August losses entirely.
Technical Analysis Points To Potential Price Movement
On the daily chart, MATIC displays bullish momentum, breaking above the crucial $0.42 resistance level. This uptrend has reversed most of the token’s losses incurred throughout August. As of writing, MATIC trades at $0.47, facing two key resistance levels before reaching the supply zone at $0.55. The immediate hurdles lie at $0.49 and $0.51.
The bullish sentiment is further bolstered by the Relative Strength Index (RSI) exceeding its average level, indicating strong buying pressure. However, the Stochastic RSI venturing into overbought territory suggests a potential correction for the MATIC rally.
Should the uptrend cool down, key short-term support levels sit at $0.46 and $0.42, acting as a safety net for investors.
Profit Taking Could Hinder Further Gains
Interestingly, MATIC stands out with its positive market sentiment, reflected in the rising weighted sentiment indicator. This suggests bullish speculation surrounding the token’s potential. However, the recent price surge has pushed the 30-day MVRV (Market Value to Realized Value) to +8%. This translates to unrealized profits of 8% for investors who bought MATIC within the last month.
This overvaluation could entice profit-taking, potentially creating a headwind for further price increases. Data from IntoTheBlock reveals that only 33% of addresses are in profit between $0.40 and $0.55, the crucial resistance zone.
Furthermore, a significant number of users (around 8,000 holding nearly 20 million MATIC) are currently at a loss within the $0.51-$0.52 price range. Reaching these levels could prompt them to sell their holdings, further hindering MATIC’s upward trajectory.
Also Read: Polygon MATIC Price Prediction – 13M Transfer Signals Potential Breakout To $0.85
While MATIC’s recent rally has been impressive, it faces potential roadblocks at the $0.51 and $0.55 resistance levels. These areas could trigger sell-off pressure from both profit-takers and investors currently underwater. The upcoming token rebranding to POL adds another layer of uncertainty to the price movement.
With these factors in mind, investors should exercise caution and closely monitor technical indicators while making informed decisions regarding MATIC.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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