MATIC’s uptick not due to ‘organic demand,’ warns analyst

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  • 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. 

Wed­son stated:

“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. 

Source: MATIC/USDT on TradingView

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.

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