Polygon (MATIC) price erased September losses to reclaim the $0.60 territory on Monday. On-chain data analysis examines how a faceoff between the growing retail market and Polygon whale investors could impact MATIC price action in the coming weeks.
MATIC price entered a double-digit percentage price rally over the weekend after the team unveiled a new governance protocol council on Thursday. Do the new joiners have enough in the tank to neutralize the whales’ long-running selling frenzy?
Polygon Attracts Record Number of Users After Vital Team Announcement
In September, Polygon Network decided to migrate from MATIC to a new POL token. As part of the rollout for the proposed Polygon 2.0, the team unveiled a Governance Council that would oversee the development and execution of critical protocol projects surrounding the new POL token.
“To ensure ongoing security while maintaining upgradability, the proposed community-governed body of 13 members will be responsible for timelock-limited upgrades to Polygon system smart contracts, i.e. components of Polygon protocols implemented as smart contracts on Ethereum.”
– Polygon Labs, October 19, 2023.
Polygon Users Increased to a Two-Month Peak
When it was first introduced in September, the POL token Whitepaper emphasized decentralization as one of the major premises.
The perceived diversity, social currency, and technical expertise of the 13 contributors listed on the governance protocol council seem to have buoyed the broader crypto community’s confidence in the Polygon network.
In an indication of this, the Polygon network attracted a record number of new joiners within 24 hours of the Governance Council announcement.
Santiment’s Network Growth chart below shows that 137,650 new MATIC addresses were created on October 20.
Notably, the last time Polygon attained this level of network growth was 40 days ago, on September 11.
Network Growth measures the daily number of new wallets created on a blockchain network. This provides a rough estimate of the rate at which the ecosystem attracts new joiners.
A rapid growth in the number of new users typically increases market demand for the underlying token.
More so, as depicted above, the spike in new MATIC wallet addresses occurred within 24 hours of the Governance Council announcement on October 19.
This suggests that the 13-man list was well received and has shored up investor confidence in MATIC. This partly explains the 25% price rally that MATIC experienced between October 19 and October 23.
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Despite the 25% Gains, Whale Investors are Still Selling
Recent development surrounding the Polygon’s imminent transition from MATIC to POL token has boosted retail market confidence. But surprisingly, on-chain data reveals that whale investors (wallets holding 1 million to 1 billion MATIC) on the Polygon network remain unimpressed.
The Santiment chart below shows that the whales have continued their two-month selling frenzy, despite the recent MATIC price breakout over the weekend.
As seen below, the sell-off began around September 5 when the whales held 560.05 million MATIC in their cumulative balances. They have since depleted their balances by 50 million MATIC tokens.
After nearly two months of selling, their balances have dwindled to just 510.48 million as of October 23.
The Whale Wallet Balance chart above provides a snapshot of real-time changes in the supply held by large institutional investors.
A persistent decline means the crypto whales are actively divesting from the underlying token. Due to their substantial holdings, a whale sell-off often puts downward pressure on price.
Evidently, the 50 million MATIC tokens sold over the last two months are worth approximately $31 million at today’s price of $0.62.
Hence, if the Polygon whales maintain this negative disposition, it could put a big question mark on the ongoing MATIC price breakout.
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MATIC Price Prediction: Consolidation Below $0.70
From an on-chain perspective, MATIC’s price will face difficulty breaking above $0.70 if the whales do not FOMO into the ongoing rally.
The Global In/Out of the Money data, which groups all current MATIC holders by their entry prices, also confirms this forecast. It shows a significant sell-wall at $0.65 could derail the Polygon price rally.
As depicted below, 4,510 addresses had bought 141.9 million MATIC at the maximum price of $0.65. This resistance territory could be daunting without significant buying activity from the whales.
However, if the Polygon new joiners have enough in the tank to clear that resistance, they could propel the MATIC price recovery toward $0.75 for the first time since July 2023.
Conversely, the bearish whales could angle for a MATIC price reversal below $0.50. However, in that case, the bulls can rely on the initial buy-wall at $0.56 for a quick rebound.
At that zone, 8,620 addresses had bought 211.01 million MATIC at the maximum price price of $0.56
If the bears flip that support level, a MATIC price could promptly decline toward $0.50.
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