Polygon (MATIC), recently rebranded as POL, has been among the worst-performing cryptocurrencies in the top 100, suffering a decline of over 62% year-to-date. However, recent metrics suggest that MATIC might be nearing a price bottom.
After reaching a yearly peak of $1.29 on March 13, MATIC has plunged by more than 70%. Despite some cryptocurrencies showing positive returns over the past year, MATIC has fallen 26% year-over-year, with 96% of its investors currently holding the token at a loss.
MATIC is now trading within a crucial price range of $0.36 to $0.39, where significant purchasing activity has occurred, with over 7 billion MATIC tokens bought in this band, according to IntoTheBlock. This high volume of demand at this price level could provide strong support, potentially marking a price bottom. However, if MATIC dips below $0.36, further declines could be possible.
The Market Value to Realized Value (MVRV) ratio, which reflects the average profit or loss of investors based on when they acquired MATIC, also signals a potential bottom. Data from Santiment shows that the MVRV ratios across various time frames—30-day, 60-day, 90-day, 180-day, and 365-day—are all below zero, indicating losses for holders. Notably, the 365-day MVRV ratio, at -96.9%, suggests that the token might be nearing a low point.
Polygon’s total value locked (TVL) in DeFi has remained stagnant, fluctuating between $800 million and $900 million over the past year, according to DefiLlama. This indicates a lack of new DeFi engagement on its network.
MATIC’s open interest (OI) has fallen to a three-year low of $27 million, down 93% from its peak of $438.8 million in February, per Coinglass. This decrease in OI reflects a cautious stance from investors, and a rebound in OI is needed to support a potential price rally.
On the daily chart, MATIC is trading near $0.3773, a two-year low, within a key price rectangle. Before hitting this low in early September, this price level was last seen in June 2022, following the market downturn after the LUNA/UST collapse.
If MATIC can maintain its position and rise above the 50-day and 200-day simple moving averages (SMA), it may potentially rally toward the upper rectangle resistance of $0.5812. A significant breakout above this resistance could trigger a notable rally.
Conversely, if MATIC closes below $0.3578 on the daily chart, this would invalidate the current bullish thesis and could increase bearish pressure. Momentum indicators such as the Relative Strength Index (RSI) and Awesome Oscillator (AO) are currently just below their neutral thresholds, reflecting a slightly bearish outlook.
