Polygon (MATIC) climbed toward $0.68 on Tuesday morning. Critical on-chain indicators explore the possibility of a sustained bullish MATIC price breakout.
Polygon (MATIC) has had a turbulent start to August, declining 6% from $0.70 to $0.66 in the first week. Early Tuesday, MATIC rebounded toward $0.68 as bulls defended the $0.65 support level. But will the declining Network Activity prevent MATIC price from reclaiming $1?
Polygon Network Activity Has Remained Relatively Flat in August
One of the key factors responsible for the recent Polygon price stagnation is the decline in user activity. According to Glassnode, Polygon’s Daily Active Users have been in a downtrend for the past three weeks.
As shown below, Polygon recorded 4,575 active users on July 21. With only 1,943 active addresses recorded on Aug 7, Polygon has experienced a 58% decline in user activity.
Daily Active Addresses tracks changes in network activity by adding up the daily number of unique wallet addresses that carry out transactions. A persistent drop in network activity is a bearish signal indicating declining demand for the underlying native token.
As observed above, the 58% drop in network demand could hamper the chances of a potential price breakout.
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MATIC Whale Investors Remain Unconvinced
Despite the recent uptick in MATIC price, the trading activity of the whale investors in August shows that they still remain unconvinced.
As shown below, the whales have already offloaded 12 million MATIC tokens from their holdings in August.
With prices currently hovering around $0.67, the 12 million MATIC tokens are worth around $8 million. When large institutional investors offload this many tokens within a week, it shows they are not confident of a potential price uptrend.
In summary, the dearth of network demand and the bearish pressure from the whales could trigger another pullback in the coming days.
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MATIC Price Prediction: Another Potential Downswing Toward $0.65
According to IntoTheBlock’s IOMAP data, MATIC could have some difficulty breaking above the $0.68 resistance.
This further confirms the prediction that whales’ selling pressure could hamper the chances of a potential MATIC price breakout.
As seen below, 6,760 addresses holding 256 million MATIC tokens at the average price of $0.68 could prevent the bullish price breakout.
But if that resistance level caves, MATIC could rally toward $0.70
In contrast, the bears will look to force a downswing toward the $0.60 territory. But as depicted above, 5,870 holders that bought 30.2 million MATIC tokens at the maximum price of $0.65 could trigger a rebound.
However, if that support gives way, the buy-wall at $0.60 could be the next significant support.
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