Binance is set to delist MATIC/BUSD perpetual contracts and leveraged Margin trading pairs on August 17. With investors advised to close out their positions immediately, on-chain data analysis examines how it could put MATIC’s price at risk of volatile price swings.
On August 10, Binance announced it would “delist and update the leverage & margin tiers of MATICBUSD perpetual contracts.” With the delisting set to take effect on August 17, investors racing to close out their positions could put MATIC’s price at risk of volatile swings.
Can the bulls soak up the pressure and hold firm at the $0.60 support level?
Derivatives Traders are Racing to Close Out their MATIC Positions
The MATIC derivative trading market has been shrinking since mid-July, according to blockchain data analytics platform, Coinglass.
MATIC Open Interest (O/I) had spiked to $187 million on July 14 after Ripple’s (XRP) landmark victory over the Securities and Exchange Commission (SEC). However, recent developments have poured cold water on investors’ optimism since then.
Between July 14 and August 14, the chart below illustrates how MATIC Open Interest has now dropped by 28% from $187 million to $134 million.
Open Interest sums up the total value of outstanding derivative contracts for an asset. A decrease in open interest is a bearish signal, indicating persistent capital outflows.
Notably, 53% of the total MATIC derivatives market is domiciled on Binance. This means that Binance’s recent decision to delist MATIC perpetual contracts could further exacerbate the outflow of capital from the Polygon native token.
Unless traders can move their trades seamlessly to alternative exchanges, the Open Interest decline could significantly weaken the $0.65 MATIC price support level.
Social Sentiment Surrounding the Polygon Network is Trending Negative
Unsurprisingly, the social sentiment surrounding the Polygon network has been trending negatively since the Binance delisting announcement on August 10.
The Santiment chart below shows that MATIC’s social volume score stood at 471 on August 10. Within three days of the Binance announcement, it has now declined 66% to just 160.
Social Volume data evaluates the current level of media coverage surrounding a blockchain project. It essentially aggregates the number of times the project is referenced across relevant crypto media channels.
Generally, when Social Volume declines, it signals reduced investor interest. And notably, Notably, since the start of Q2, MATIC Social Volume has become closely correlated to price.
In conclusion, these critical on-chain metrics suggest that MATIC’s price could be at risk of a volatile downswing in the coming days.
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MATIC Price Prediction: The Bears Could Target $0.60
Considering the potential negative impacts of the Binance delisting, MATIC price could be at risk of a significant bearish reversal.
The In/Out of Money (IOMAP) data shows the distribution of current Polygon token holders within the 20% price boundaries. As seen below, it also corroborates the prediction the MATIC Price could drop toward $0.60
At that zone, 6,320 addresses had bought 119.8 million MATIC tokens at a minimum price of $0.62. If they hold firm, they could trigger an instant price rebound.
But, if they decide to exit their positions amid massive capital outflows triggered by the Binance delisting, MATIC’s price will likely drop below $0.60.
Still, there’s a chance that Polygon derivatives investors are able to move their trades to other exchanges less sensitive to regulations. In that case, the bulls could force an upswing toward the $0.75 territory.
However, the cluster of 5,680 addresses had bought 213.4 million MATIC tokens at the maximum price of $0.72. They could mount a formidable resistance sell-wall if they chose to exit their positions at break-even.
But if that resistance level cannot hold, MATIC could head toward $0.75.
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