Why Polygon’s MATIC May Have Bottomed Out Amid Underperformance

• MATIC is down more than 70% from its yearly high of $1.29.
• The token is trading around the high demand zone of $0.36 – $0.39; the 365-day MVRV marks the price bottom.
• MATIC could confirm a bottom with a rebound from the two-year low at $0.3578.

Polygon MATIC, now known as POL, has been one of the worst-performing cryptocurrencies in the top 100 since the start of the year, down more than 62% year to date. However, several key metrics on Wednesday suggest that the price may have bottomed out.

MATIC is at a critical point that represents a potential price bottom

After hitting a yearly high of $1.29 on March 13, MATIC has dropped by over 70%. While several cryptocurrencies are still posting positive annual returns despite the recent market downturn, MATIC has dropped by 26% over the past year. The underperformance has left 96% of investors holding onto their token at a loss.

MATIC is trading around a critical price range of $0.36 – $0.39, with investors purchasing over 7 billion MATIC tokens, according to data from IntoTheBlock. Due to the high demand around this price, investors may critically defend it, causing a potential price bottom. However, a further drop below $0.36 could leave room for more downsides.

MATIC Global In/Out of the Money

MATIC’s Market Value to Realized Value (MVRV) ratio, which measures the average profit or loss of addresses that purchased the token within a specific time frame, paints a similar picture. The 30-day, 60-day, 90-day, 180-day, and 365-day MVRV ratios are all below zero, indicating that investors who purchased MATIC within the respective time intervals are all incurring losses, according to Santiment data. The 365-day MVRV in particular, at 96.9%, indicates a potential price bottom.

MATIC MVRV ratios

Another key metric is Polygon’s total value locked (TVL), which has remained relatively flat, hovering around $800 million to $900 million over the past year, according to DefiLlama data. This shows a lack of new DeFi interest in its blockchain network.

MATIC could rise to $0.5812 if it breaks above the 50- and 200-day SMAs

MATIC (POL) open interest is at a three-year low of $27 million, down 93% from a record high of $438.8 million in February, according to Coinglass data. Open interest is the total number of unsettled contracts in a derivatives market. The low OI shows that investors are still risk-averse towards MATIC. The OI needs to increase to support a potential rally.

On the daily chart, MATIC is trading around the $0.3773 price level — a two-year low — within a major rectangle. Before the early September low, this level was last seen in June 2022, following the bearish trend after the LUNA/UST implosion.

MATIC/USDT Daily Chart

On the downside, MATIC could find support near the $0.3578 level. On the upside, MATIC could rally towards the rectangle resistance at $0.5812 if the price breaks above the 50-day and 200-day simple moving averages (SMA). A further move above the upper rectangle resistance around $0.5812 could spark a significant rally.

The momentum indicators of the Relative Strength Index (RSI) and the Awesome Oscillator (AO) are just below their neutral levels of 50 and 0 respectively, indicating a slight bearish bias.

A daily candlestick close below $0.3578 invalidates the thesis and creates more bearish pressure.