According to Beincrypto: The price of Polygon (MATIC) has been in “freefall” after the US Securities and Exchange Commission (SEC) listed the token on a list of more than 10 cryptocurrencies identified as securities. The MATIC price plunged 15% as the recent SEC lawsuit against Binance spread negative sentiment across the market. After the first sell-off on Monday, panicking investors are now withdrawing their tokens from various DeFi smart contracts.
Investors are withdrawing tokens from smart contracts
After testing the $0.9 mark last week, the price of Polygon (MATIC) has been in the red since Monday. However, selling pressure may increase in the coming days.
An in-depth analysis of underlying on-chain data on Polygon reveals that the investors involved have been canceling their MATIC token staking at an unprecedented rate.
From May 29 to June 8, MATIC supply in smart contracts decreased from 64.9% to 63.7%. This means that 111.5 million MATIC tokens (1.2% of the total circulating supply) have been de-staking in the past week.
Data from Smart Contract Supply tracks the percentage of the total circulating supply of the cryptocurrency that holders have locked across various DeFi protocols. When investors cancel staking a large number of tokens in a short time, it can cause a spike in the volume of tokens available for trading on exchanges.
At the current price of $0.78, the recently de-staking tokens are worth around $87 million. If a significant percentage of these tokens are pumped into the market, MATIC holders could face an even more intense drop in the coming days.
Long-term holders are slowly losing faith
Furthermore, the sharp increase in Age Consumed data shows that long-term investor confidence is low in the Polygon ecosystem. According to on-chain data, long-term investors have been selling off more of their assets over the past week.
Age Consumed measures the trading activity of long-term investors by tracking the number of recently sold coins multiplied by the number of days since they were last moved. MATIC's Age Consumed skyrocketed 2,400% from 38.2 million to 950.9 million between June 2 and June 8.
When Age Consumed spikes, as seen above, it signals that long-term holders are selling off large amounts of coins. This could cause potential new investors to become pessimistic about MATIC's future price outlook.
In conclusion, new de-staking tokens that are likely to flood the market and low confidence among Polygon's long-term investors are the key factors that will drive the price down further. This suggests that the price of MATIC is likely to fall further in the coming days.
MATIC Price Prediction: Sellers can pressure the price to retest $0.65
The pessimistic mood of long-term investors suggests that the price of MATIC may fall to $0.65. However, according to IntoTheBlock's In/Out of the Money Price (IOMAP) data, Polygon will likely receive initial support around $0.76.
In that region, there is a wall of demand created from 8,800 addresses that bought 606.5 million MATIC at an average price of $0.76. But if that support is not firm enough, the MATIC price could drop to a bottom of $0.65.
However, the bulls could prevail if the price of MATIC breaks through the $0.8 level. But as seen above, a fraction of the 18,160 investors bought 183.4 million coins for around $0.8 which could be a hindrance.
Only if that resistance is broken will MATIC be able to push the momentum up towards $0.89.
***This is a personal opinion, be careful when you decide to invest.
