Coin World News Report:
After a 14% rebound over the weekend, MATIC price stalled at $0.49 on July 8th, and derivative market data trends show that most MATIC traders have chosen to close their positions amid increased volatility.
The MATIC price approaching $0.50 demonstrates resilience in the bull market.
The price trend of MATIC reflects the downward spiral trend in the cryptocurrency market in the first week of July 2024. However, after the positive non-farm payroll report was released on Friday, Polygon (MATIC) showed a strong recovery signal.
As an Ethereum scaling solution, Polygon (MATIC) has been striving to attract attention since Ethereum migrated to the Proof-of-Stake (PoS) consensus. The intensified cryptocurrency market sell-off led to an accelerated decline in the stock market.
MATIC Price Action | TradingView
During the intense sell-off in the cryptocurrency market, the MATIC price dropped below $0.43. It is worth noting that this is the lowest level in over two years since July 2022. However, compared to most other altcoins in the top 20 cryptocurrency market rankings, MATIC still maintains a considerable annual timeframe return.
This highlights that since Ethereum completed the PoS migration in September 2023, MATIC’s performance has been poor due to concerns of being outdated, and it is expected to migrate to the new “POL” token.
In recent months, the Polygon team has taken significant measures to boost investor confidence. Milestone collaborations with popular projects like Chainlink may open up new markets and expand the utility of the MATIC token in the coming months.
However, recent trends observed in the MATIC derivatives market indicate that investors have not been buying into these new initiatives.
The Coinglass chart below tracks the changes in total capital invested in specific cryptocurrency futures contracts. When compared and analyzed with the current price trend, it reveals the direction of investor sentiment.
MATIC Price and Open Interest | Coinglass
As shown in the above chart, as of July 1st, the open interest for MATIC was $176.9 million. However, since the frenzy in the spot market sell-off led to a 24% price decline, MATIC derivatives traders have shown weaker resilience.
At the time of writing this article on July 8th, the open interest for MATIC has dropped to $129 million. This $47.9 million decrease resulted in a 27% decline in capital invested in the MATIC derivatives market.
During a market downturn, when the open interest of an asset declines faster than its price, it indicates a strengthening bearish momentum, and there are several reasons for this.
Firstly, it indicates traders closing their positions, either as a strategy to reduce losses or due to forced liquidation, which adds pressure to the price decline.
This behavior suggests that traders lack confidence in the asset’s recent recovery potential, resulting in a decrease in speculative buying and hedging activities in the derivatives market.
Secondly, as observed with MATIC, the significant decrease in open interest implies that new capital has not entered the market to support the asset.
The lack of this new investment indicates that traders either reallocate funds to other assets with more hopeful short-term prospects or remain on the sidelines due to uncertainty.
Therefore, unless there is a significant shift in market sentiment or renewed buying interest in both the spot and derivatives markets, the decrease in open interest, coupled with the recent price decline, will reinforce the bearish outlook for MATIC.
MATIC Price Prediction: Retesting $0.40 is impending?
MATIC has been experiencing a significant downward trend, with a series of lower highs and lower lows evident on the daily chart. The price is currently trading at $0.4978, slightly above the ALMA (Arnaud Legoux Moving Average) at $0.4899, which serves as a short-term support level. However, the overall sentiment remains bearish, with a high possibility of further decline.
The recent price action has seen MATIC slightly recover from its low point of $0.4602, rising by approximately 4.19% in the process. Despite the short-term rebound, the overall trend remains bearish.
MATIC Price Prediction | TradingView
The Auto Fibonacci retracement levels indicate that the price is struggling to break above the 23.6% retracement level, which aligns with the resistance level at $0.5143. Failure to sustain above this level could lead to another wave of selling pressure.
The key support levels to watch are $0.45 and the psychological level of $0.40. The $0.45 level has previously acted as support, and breaking below it could signal a retest of the $0.40 level, marking a significant decline.
On the upside, the level of $0.5143 serves as immediate resistance, followed by $0.55, which aligns with the 38.2% Fibonacci retracement level. Breaking through these levels would invalidate the bearish outlook and signal a potential reversal.
