Polygon (MATIC) Price Signals Potential 20% Drop

Polygon (MATIC) fell to $0.55 on Aug 22, the lowest since July 2022. About 95% of MATIC investors are in the red, and increased deposits on exchanges hint at more selling ahead. New user sign-ups for Polygon are at a 2-year low, as attention shifts to newer L2 networks like Optimism, Arbitrum, and Base.

The price of Polygon (MATIC) dropped below $0.55, the lowest since July 2022. Investors are focusing on newer L2 networks. Key indicators suggest MATIC’s price might go down further.

This year, the growth of the Polygon network has been influenced by various factors like disagreements with the US SEC and the rise of new Layer-2 networks such as Optimism, Arbitrum, and Base.

To address this, the team changed their CEO and talked about shifting to a new token called “POL” instead of MATIC. However, despite these changes, MATIC’s price has continued to drop this year.

Reasons for MATIC Price Decline

The MATIC price is going down because Polygon’s network isn’t growing as much. This is a big reason why the price has been dropping in the second half of 2023. Recent data from Glassnode shows that the number of new addresses on Polygon is at its lowest in two years.

For example, on August 20, only 527 new addresses were added to Polygon. Then, on August 22, there were 556 new addresses. It’s important to mention that the last time Polygon had less than 530 new addresses was in February 2021.

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Polygon (MATIC) Price in Danger Zone | New Addresses | Source: Glassnode

When investors count the new wallet addresses made each day, they can see how many new users are joining the blockchain network.

The fact that MATIC’s new addresses have gone down to the lowest in two years means that the Polygon Network’s growth has slowed down in the second half of 2023. But, on the other hand, other networks like Optimism, Arbitrum, and Base are getting more new users lately.

This might lead to big risks of becoming outdated, which could make the MATIC price go down even more in the next few weeks. People who use MATIC will probably want the Polygon 2.0 (POL) tokenomics to happen faster, and this is already in progress.

MATIC Holders Getting Ready for More Selling

Confirming the negative view, MATIC holders are getting ready to sell more in the near future. As seen recently, on August 21, more MATIC tokens were put into exchanges than taken out, with a difference of 8.41 million tokens.

This is important because the last time there were more than 8.4 million MATIC tokens sent to exchanges was on July 17, when the number was 23.42 million. This led to a 15% drop in the MATIC price by the end of that month.

Polygon (MATIC) Price in Danger Zone | Exchange Netflows | Source: IntoTheBlock

Exchange Netflows watch how quickly people put their assets into crypto exchanges. When there’s a big rise in positive Netflows, it means that more people are putting their tokens in exchanges for short-term trading instead of holding onto them.

It seems that investors are sending their MATIC tokens to exchanges, thinking the price will drop more.

To sum up, the MATIC price might keep going down for these reasons. The spike in Exchange Netflows might lead to more selling soon.

Also, because the Polygon network isn’t growing as much, it could be hard for MATIC to find new demand to balance out the selling pressure.

MATIC Price Forecast: Decline to $0.50

The In/Out of Money Around Price data shows how much current investors bought MATIC for on the Polygon network. It’s clear that MATIC’s price has gone down by 26% this year, causing 95% of holders to be at a loss.

If a lot of these unhappy holders decide to sell, the price of MATIC could drop a lot, maybe to $0.50. However, looking at the info below, there are 1,560 addresses that bought 2.35 million MATIC at an average of $0.52.

These buyers might give good support by trying to cover their positions as a last resort. But if their efforts don’t work, MATIC’s price could go down even more, maybe below $0.50.

Polygon (MATIC) Price Prediction | IOMAP data. Aug 2023 | Source: IntoTheBlock

It’s not very probable, but if the MATIC price goes back up past $0.65, there might be a positive momentum. However, about 43,200 addresses bought 64 million MATIC at the highest price of $0.58, which will make it hard to go above that.

If those people change their minds, then MATIC might get back to $0.65.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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