Polygon is noticing a bearish market structure and is preparing to suffer more losses. The rise in dormant circulation warns of a wave of selling pressure coming.
The cryptocurrency Polygon [MATIC] experienced a worsening downtrend in June. It began on June 11 when the price dropped below a 2-month range. On June 16, the low point of $0.621 was retested as resistance.
This solidified the grip of the bears and paved the way for a new round of downside. At the time of writing, $0.59 is the next key resistance level. Should bulls anticipate more losses and remain cautious in the market?
The next HTF support level is also a psychologically important level.
With the $0.59 level turning into resistance, $0.5 is the next psychological and technical support level. This was crucial in September and October 2023, triggering a massive rebound that saw the Polygon cryptocurrency reach a high of $1.29 in May 2024.
Therefore, it is expected that such support measures will be taken to find liquidity. The market structure on a daily timeframe is severely bearish.
Therefore, the $0.5 level may not immediately reverse the downtrend but could temporarily halt it.
CMF is at -0.03, and traders can wait for it to fall below -0.05 to indicate a significant outflow of funds from the market. RSI is at 33, showing a steady downward trend.
If the indicators continue to decline, it will have a negative impact on the opportunity to support the $0.5 level.
The surge in dormant circulation hints at the next price movement
On June 24, the dormant circulation saw a significant surge. The last time a similar proportion of increase occurred was in mid-April when the price tested the $0.6 support level multiple times.
Read Polygon’s [MATIC] price forecast for 2024-25
This signals a surrender of buyers of the Polygon cryptocurrency, a scenario that is playing out again. This could lead to further price declines. The MVRV ratio is negative, indicating that short-term buyers are at a loss. Any rebound may be sold to these traders to achieve a balance of profits and losses, making recovery more challenging.
Disclaimer: The information provided does not constitute financial, investment, trading, or any other type of advice, and is solely the opinion of the author.
