Polygon (MATIC) has experienced a significant decline in price in 2023, hovering around the $0.55 mark, its lowest point this year. Despite this, on-chain data reveals a notable uptick in activity from whale investors, suggesting potential bullish sentiment. However, the behavior of retail investors remains subdued, raising questions about MATIC’s short-term price trajectory. This analysis explores the dynamics between whale and retail investors and provides insights into what lies ahead for MATIC.
Whales Respond to Founder’s Update
On August 28, Polygon Co-Founder Nailwal Sandeep provided a crucial update regarding the transition from MATIC to a new “POL” token. Subsequent events indicate that whale investors reacted positively to this announcement.
Within 24 hours of the update, MATIC whales embarked on an accumulation spree, disregarding the prevailing bearish price trend. The Santiment chart illustrates that a group of crypto whales holding balances ranging from 1 million to 100 million MATIC tokens began buying on August 29. Over the period from August 29 to September 4, they added 47 million MATIC tokens to their holdings, valued at approximately $25.85 million at the current price of $0.55 per token.
This surge in whale activity has pushed their cumulative wallet balances to an all-time high of 402 million MATIC. While this demonstrates institutional investors’ optimism, it remains uncertain whether retail investors will follow suit.
Retail Investors Remain Cautious
In contrast to the bullish sentiment among whales, retail investors on the Polygon network appear hesitant. Daily Active Addresses on Polygon have not recovered since the altcoin market crash on August 17. On that date, Polygon recorded 1,989 Active Addresses, which have steadily declined to new lows. As of September 4, only 1,499 wallet addresses interacted on the Polygon network, marking a 25% drop in network traction compared to August 17.
The Active Addresses metric tracks the participation rate of retail investors by counting the number of unique wallet addresses conducting daily transactions. The persistent decline in Active Addresses suggests that retail investors have been avoiding MATIC in recent weeks.
Price Prediction: MATIC Faces Consolidation
In light of the lack of a substantial uptick in retail demand, the likelihood of MATIC’s price surpassing $0.60 in the near future remains slim. However, the bullish stance of whales may prevent a significant downturn below $0.54. Consequently, MATIC is expected to consolidate around the $0.60 mark.
The In/Out of Money Around Price data reveals that 6,520 wallet addresses purchased 49.5 million MATIC tokens at the maximum price of $0.59, potentially serving as a resistance level. If retail demand continues to decline, this resistance could hinder a price rally. However, if bullish whales can break through this resistance, MATIC’s price may target $0.65.
Conversely, if retail demand continues to dwindle, MATIC could dip below the $0.50 range. A significant number of addresses (5,570) bought 108 million MATIC tokens at an average price of $0.54, possibly forming a strong support level. However, if this support fails to hold, MATIC may descend below $0.50 for the first time since May 2022.
MATIC’s recent price action and on-chain data highlight the contrasting behaviors of whale and retail investors. While whales have been accumulating, retail investors have shown caution. The future trajectory of MATIC’s price will likely depend on whether retail demand picks up to complement the bullish sentiment of whales. In the absence of robust retail participation, MATIC is expected to consolidate, with potential resistance and support levels defining its short-term price range.