- There has been a steady rise in MATIC’s Supply on Exchanges.
- However, market sentiment showcased slowing demand among retail investors.
The recent surge in Polygon’s [MATIC] supply on cryptocurrency exchanges may not be due to genuine demand for the token by the general market. In a new report, pseudonymous CryptoQuant analyst Joao Wedson found:
“Recently, we have witnessed a peculiar scenario in which the price of MATIC experienced a notable increase, coinciding with a significant rise in reserves held by exchanges. However, upon closer analysis of this situation, it becomes evident that price fluctuations may not be directly aligned with the interests of the public.”
The token’s value experienced an 18% uptick in the last month amid the rally in its Supply on Exchanges. Meanwhile, Wedson’s assessment of the general market sentiment revealed that:
“There seems to be no clear correlation with a proportional increase in public interest or organic demand.”
Regarding the cohort of MATIC holders driving the rally, the analyst referenced a “theory” that this may be due to token accumulation by crypto exchanges.
“A theory gaining strength is the possibility that the recent surge in Matic is closely linked to the accumulation of coins by exchanges. This suggests that the upward momentum in price may have been driven more by internal exchange strategies than by a substantial increase in demand from common investors.”
Low demand from spot traders
An assessment of MATIC’s performance on a 24-hour chart revealed a steady decline in accumulation since the 12th of November.
Further, the values of its Relative Strength Index (RSI) and Money Flow Index (MFI) were pegged below their center lines. At press time, the RSI and MFI stood at 50.05 and 39.48, respectively.
The values of these key momentum indicators showed that token selling has significantly outpaced accumulation among daily traders.
Further, MATIC’s Moving Average Convergence/Divergence Indicator (MACD) confirmed the bearish sentiment that has permeated the market.
Read Polygon’s [MATIC] Price Prediction 2023–24
There has also been a steady decline in Open Interest in the Futures market. According to data from Coinglass, MATIC’s Open Interest has steadily decreased by 21% since the 16th of November.
When an asset’s Open Interest declines, it means that traders are closing out existing positions. This is done to take profits or as a hedge against potential losses.