Polygon's MATIC Has Lost a Vital Support Level
Polygon’s MATIC lost a major support level shortly after on-chain activity showed that 1.4 billion tokens had been transferred from the project's vesting contract.
- Around 1.4 billion MATIC tokens were transferred from Polygon’s vesting contract Monday.
- The transaction was followed by a spike in selling pressure, pushing the token below critical support.
- MATIC must regain $0.89 as support soon to avoid a steep correction to $0.60.
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Polygon has dropped below a vital area of support after a series of on-chain transactions sparked a furore within the cryptocurrency community.
Polygon’s MATIC Faces Potential Selloff
Polygon has become the talk of the crypto community after 14% of the total MATIC supply was transferred from its vesting contract.
A sense of commotion struck the cryptocurrency market after on-chain data revealed that 1.4 billion MATIC tokens had been transferred from Polygon’s vesting contract. In response, Polygon co-founder Sandeep Nailwal confirmed that the token release was part of a “planned movement” and urged the community to check Polygon’s vesting schedule.
Polygon’s team detailed the allocation for the 1.4 billion MATIC tokens vested in an announcement following the unlock. According to the team, the goal is to distribute these tokens across different segments of the project. 546.6 million MATIC will go to the foundation’s treasury, 200 million MATIC will be used for staking rewards, and 640 million MATIC will be allocated to the team.
MATIC dipped below a crucial support area following the token unlock, increasing the risk of a sell-0ff.
IntoTheBlock’s In/Out of the Money Around Price (IOMAP) shows that more than 7,400 addresses have previously purchased nearly 1.6 billion MATIC between $0.89 and $0.92. If prices stay below this interest zone, the likelihood of some market participants exiting their positions to prevent losses increases.
The pessimistic outlook coincides with a sell signal that the Tom DeMark (TD) Sequential indicator has presented on MATIC’s three-day chart. The bearish formation developed after MATIC was rejected by the 50-day moving average. If validated, Polygon could enter a one to four three-day candlestick correction that pushes prices to $0.60.
Given the importance of the 50-day moving average, MATIC would likely need to print a three-day candlestick close above it to invalidate the bearish thesis. Still, the 200-day moving average is sitting just above this resistance level, suggesting that Polygon will need to rise above $1.20 to advance higher. If it breaks through resistance, it could surge to $1.65.
Disclosure: At the time of writing, the author of this piece owned BTC and ETH.
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