Polygon (MATIC) price reclaimed the $0.80 territory on Nov. 9. On-chain analysis identifies some vital bullish indicators that could shape MATIC price action in the days ahead.
MATIC has emerged as one of the biggest gainers in the top 20 crypto market gainer’s charts this month. Here’s how the Polygon community’s positive reaction to the recent token migration announcement could further propel MATIC’s price.
Daily Transaction Count on Polygon Network Increases significantly
On Sept.15, Polygon Labs published a blog post announcing an imminent transition to a new POL Token for “improved decentralization and expanded utility.” The community initially reacted skittishly, sparking a MATIC price retracement to $0.50 around Sept. 29.
However, following further clarification and the introduction of the execution team, the Polygon community appears to have warmed up to the idea. Indicatively, on-chain data reveals that the Polygon network transaction count has reached its highest level since Sept. 28.
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The chart below vividly illustrates that Polygon network transactions have been on a steady rise in November. On Nov. 8, Polygon recorded 6,490 transactions, the highest since Sept. 28, suggesting the market FUD that heralded the POL token’s initial announcement has waned.
The transaction count metric represents the total number of confirmed transactions involving a particular cryptocurrency on a given day. Typically, a steady increase in transaction count, as observed above, implies growing investor interest.
Unsurprisingly, the 67% increase in Polygon transactional activity between Sept. 26 and Nov. 9 has been accompanied by a 60% rise in MATIC price.
In a more recent blog post, Polygon Labs announced the launching of Polygon Village 2.0. During the launch, the team announced a $90 million fund for ecosystem development.
As founders compete for a share of the over 110 million MATIC up for grabs in “grants, mentorship, and ecosystem support,” Polygon’s transactional activity could increase further in the weeks ahead.
Futures Traders Bet $100 Million to Front-Run MATIC Price Rally
Bullish trading activity among crypto derivatives traders is another major factor that could drive up MATIC prices. According to the crypto analytics platform Coinalyze, MATIC Futures markets have witnessed a noticeable increase in capital inflows over the past month.
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The chart below illustrates that MATIC open interest was around $90 million as of opening on Oct. 9. Meanwhile, as of Nov. 9, that figure has skyrocketed to $190 million. This highlights that the total value of outstanding MATIC futures contracts has increased by more than $100 million within the past month.
In the context of crypto derivatives trading, open interest represents the total value of unsettled futures contracts for a particular asset. Typically, an increase in open interest implies that new market entrants are directing fresh capital inflows toward the underlying asset.
Notably, when investors keep bringing in fresh capital inflows during a rally, it emphasizes their confidence in the ongoing price uptrend.
Hence, the $100 million increase in MATIC open Interest over the past month is a key indicator that most investors currently expect more price gains.
MATIC Price Prediction: Road to Reclaim $1
From an on-chain standpoint, the rising network activity and massive capital inflows from derivatives market traders are major drivers behind the ongoing Polygon price rally. With these bullish indicators still trending upward, it puts MATIC’s price in a prime to make another leg-up.
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The Global In/Out of the Money (GIOM) data, which groups the current Polygon investors according to their entry prices, also confirms this bullish prediction.
It, however, shows that MATIC’s price must first scale the initial resistance at $0.92 for the bulls to be confident of reclaiming $1. As shown below, 61,960 holders had bought 1.71 billion MATIC at the maximum price of $0.92 If those holders exit early, they could slow down the MATIC price recovery mission.
But if the bulls can scale that resistance level, MATIC price will likely reclaim $1 as predicted.
Still, the bears could negate the optimistic prediction if MATIC price reverses below $0.80. But, in that case, the 38,090 MATIC holders that bought 3.96 billion MATIC at the minimum price of $0.79 could mount a support wall. If those investors can HODL firmly, Polygon will likely avoid a significant price retracement.
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