Polygon (MATIC) Price Analysis: DeFi Stakers Looking for Greener Pastures?
Polygon (MATIC) price is now down 45% from its 2023 peak recorded on April 18. On-chain data shows how investors have been withdrawing funds from the Polygon (MATIC) ecosystem since Ethereum’s Shanghai Upgrade was completed. Will this lead traders to make more bearish MATIC price predictions in the coming days?
Polygon (MATIC) price has been in free fall in the last 30 trading days. An in-depth on-chain analysis shows that investors have been unstaking their MATIC tokens at an unprecedented rate.
Here’s how this concerning trend could impact the MATIC price going forward.
Investors are Unstaking at an Unprecedented Rate
On May 15, Ethereum Supply on Exchanges dwindled to new lows as investors continued to move their ETH into different staking protocols.
After years of serving as the prime Proof of Stake and alternative scaling solution for Ethereum, it appears that the success of the April 12 Shanghai Upgrade is negatively impacting the staking dynamics in the Polygon ecosystem.
Since April 13, investors have unstaked 92 million MATIC tokens (1% of the total circulation supply) from various smart contracts.
The chart below shows how the percentage of MATIC staked in smart contracts began to drop just a week before the Shanghai Upgrade, marking Ethereum’s full transition to the PoS consensus.
Supply in Smart Contracts tracks the percentage of a cryptocurrencies’ total circulating supply that investors have locked up across various DeFi protocols.
When it starts to decrease, it causes a surge in the supply of tokens available to be traded on exchanges. If that supply outpaces demand, it could put downward pressure on the price of the underlying token.
Polygon Exchange Supply is on the Rise
According to data from the blockchain analytics platform Glassnode, MATIC Supply on Exchanges appears to be one of the driving factors behind its current price drop.
The Supply on Exchanges metric evaluates the number of tokens currently deposited in recognized exchange wallets.
The purple line in the chart below depicts how the number of MATIC Supply on Exchanges began to rise just before the Shanghai Upgrade.
Between April 11 and May 16, investors moved 124 million additional MATIC coins into exchange wallets.
Notably, historical data shows that the Supply on Exchanges appears to have a negative correlation to MATIC price. Ideally because moving crypto to an exchange indicates users are planning on selling their holdings.
This suggests that the bearish Polygon (MATIC) price prediction could be validated unless investors begin to move coins off exchanges.
MATIC Price Prediction: The Bearish Trend Could Reach $0.75
IntoTheBlock’s In/Out Money Around Price data points towards a possible Polygon price retracement toward $0.75 if staking dynamics do not improve. But to be confident of the negative MATIC price prediction, the bears much first the $0.83 support.
At that zone, 18,000 investors that bought 248 million MATIC at the average price of $0.83 will pose a strong challenge.
But if the bears can push past that support level, MATIC will likely drop as far as $0.75.
Still, the bulls could invalidate the negative price prediction if MATIC breaks above $0.90.
But, the 28,000 investors that bought 613 million MATIC at the average price of $0.90 will likely take profits.
If the bulls manage to breach that resistance zone, it could trigger a prolonged rally toward $0.98.
