Monday, February 6, 2023

Ethereum’s Top Scaling Solution Is Eyeing a Breakout

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Key Takeaways

  • Polygon’s MATIC has seen its price increase by more than 13% in the past two days. 
  • On-chain metrics show stiff resistance at $1.53 while demand is picking up.
  • Overcoming this crucial hurdle could result in a 41% price increase. 

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Polygon has held above a critical support level following the steep correction seen in the cryptocurrency markets over the past few weeks. Whales appear to have enjoyed the retracement to buy tokens at a discount, positioning MATIC for a significant bullish impulse.  

Polygon’s MATIC Sees Buying Pressure

Polygon appears to be gaining the buying pressure it needs to break out. 

The Layer 2 scaling network’s MATIC token has seen a price increase of more than 13% over the past two days. MATIC bounced off the X-axis of a descending triangle that has been developing on its 12-hour chart since mid-January. Although Polygon continues to consolidate within this technical pattern, a breach of the $1.54 resistance level could result in significant gains.  

The height of the triangle’s Y-axis added to the breakout point suggests that a sustained close above $1.54 could result in a 41% upswing to $2.16.   

Polygon MATIC price chart
Source: TradingView

Still, on-chain data shows that slicing through $1.54 may prove challenging. 

IntoTheBlock’s In/Out of the Money Around Price model shows that nearly 18,500 addresses have previously purchased more than 850 million MATIC between $1.54 and $1.59. The significant supply wall could have the strength to absorb any upward price action, while a 12-hour candlestick close above this hurdle could lead to higher highs. 

Polygon MATIC transaction history
Source: IntoTheBlock

It is worth noting that the buying pressure behind Polygon has seen a significant acceleration over the past three weeks. The Polygon addresses holding between 1 million and 10 million MATIC have added more than 60 million MATIC worth roughly $84 million to their holdings since Apr. 8. If buy orders continue to increase, MATIC could see a breakout.  

Polygon MATIC whales activity
Source: Santiment

As the odds appear to favor the bulls, the $1.25 support level is likely to be decisive. A clear drop below this demand zone could invalidate the optimistic outlook and result in a steep correction. MATIC could then drop $1.14 in search of support. 

Disclosure: At the time of writing, the author of this piece owned ETH and BTC. 

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