Can Polygon [MATIC] Achieve a 17% Surge Soon? A Detailed Analysis

MATIC’s Negative MVRV Ratio: A Buy the Dip Opportunity

MATIC’s negative Market Value to Realized Value (MVRV) ratio presents a favorable opportunity for traders looking to “buy the dip.” According to crypto analyst Ali Martinez, MATIC may be poised for a double-digit rally.

Potential for a 17% Price Rally

Polygon [MATIC] could experience a 17% price rally if it breaks above its parallel channel, as noted by Ali Martinez in a recent post on X (formerly Twitter). Analyzing the L2 token’s movements on a 4-hour chart, Martinez identified a consolidation within a range since early April, forming a parallel channel pattern.

Understanding the Parallel Channel Pattern

This pattern occurs when an asset’s price action is confined between two trend lines, indicating a period of consolidation. At the time of writing, MATIC was trading at $0.72 and moving toward the upper line of its parallel channel.

When an asset rallies toward the upper trendline of a parallel channel, it is typically an attempt to test resistance. If this position fails to hold and a breakout occurs, the asset may reach new price highs.

Short-Term Challenges for MATIC

However, AMBCrypto has noted that MATIC’s rally above this resistance level may face short-term challenges. The token’s price is trading close to its 20-day Exponential Moving Average (EMA). When an asset’s price fluctuates around this moving average, it suggests market indecision, with neither buyers nor sellers able to establish dominance.

For a breakout above the resistance, there needs to be a surge in buying pressure, giving the bulls clear market control. Yet, MATIC’s MACD line (blue) is gearing to fall below its signal line (orange), indicating a potential rise in bearish momentum.

MACD Line and Market Sentiment

When an asset’s MACD line attempts to fall below its signal line, it is generally seen as a bearish signal, suggesting weakening upward momentum and a possible shift toward a downtrend.

Is Now a Good Time to Buy?

MATIC’s MVRV ratio, using a 365-day moving average, has flashed a buy signal. According to Santiment’s data, this metric was at -12.58% at the time of writing. The MVRV ratio measures the difference between MATIC’s current market price and the average price of every token acquired.

When this metric returns a negative value, it indicates that MATIC is undervalued, as its market value is below the average purchase price of all tokens in circulation. This is seen as a buy signal because traders view it as an opportunity to acquire the token at a discount compared to its historical cost basis.

  • MATIC’s negative MVRV ratio presents a buying opportunity.
  • Potential 17% rally if MATIC breaks above its parallel channel.
  • Challenges include proximity to the 20-day EMA and bearish MACD indicators.
  • MVRV ratio suggests MATIC is currently undervalued.