Coin World News Report:
After a 14% rebound over the weekend, the MATIC price stagnated at $0.49 on July 8th, and derivative market data trends show that most MATIC traders chose to close their positions amidst increased volatility.
The MATIC price approaching $0.50 demonstrates the resilience of the bull market. The MATIC price trend reflects the downward spiral trend that the cryptocurrency market fell into during the first week of July 2024. However, after the positive non-farm payroll report was released on Friday, Polygon (MATIC) showed a strong recovery signal.
As an extension solution of Ethereum, Polygon (MATIC) has been striving to attract attention since Ethereum migrated to Proof of Stake (PoS) consensus. The intensified sell-off in the cryptocurrency market has led to an accelerated decline in stock prices.
During the intense sell-off in the cryptocurrency market, the MATIC price fell below $0.43. It is worth noting that this is the lowest level in over two years since July 2022. However, compared to most other altcoins in the top 20 rankings in the cryptocurrency market, it still maintains a considerable annual time frame return.
This highlights that since Ethereum completed the PoS migration in September 2023, MATIC has performed poorly due to concerns about obsolescence, and it is expected to migrate to the new “POL” token.
In recent months, the Polygon team has taken significant measures to boost investor confidence. Milestone partnerships with popular projects such as Chainlink may open up new markets and expand the utility of the MATIC token in the coming months.
However, recent trends observed in the MATIC derivatives market indicate that investors have not purchased these new initiatives.
The following Coinglass chart tracks the changes in the total capital invested in specific cryptocurrency futures contracts. When compared and analyzed with the current price trend, it reveals the direction of investor sentiment.
As shown in the above chart, as of July 1st, the open interest of MATIC was $176.9 million. However, since the crazy spot market sell-off resulted in a 24% price drop, MATIC derivative traders have shown weaker resilience.
As of the writing of this article on July 8th, the open interest of MATIC has dropped to $129 million. This $47.9 million decrease resulted in a 27% decrease in capital invested in the MATIC derivatives market.
During a market decline, when the open interest of an asset decreases faster than its price, it indicates that bearish momentum is strengthening, and there are many reasons for this.
First, it indicates that traders are closing their positions, either as a strategy to reduce losses or through forced liquidation, which exacerbates the downward pressure on prices.
This behavior indicates that traders lack confidence in the asset’s short-term recovery potential, leading to a decrease in speculative purchases and hedging activities in the derivatives market.
Secondly, as observed in MATIC, the significant decrease in open interest implies that new capital has not entered the market to support the asset.
The lack of this new investment indicates that traders either reallocate funds to other assets with more hopeful short-term prospects or stay on the sidelines due to uncertainty.
Therefore, unless there is a significant shift in market sentiment or a resurgence of buying interest in the spot and derivatives markets, the decrease in open interest, coupled with the recent price decline, will strengthen the bearish outlook for MATIC.
MATIC Price Prediction: Will $0.40 be retested soon?
MATIC has been experiencing a significant downward trend, as evidenced by a series of lower highs and lower lows on the daily chart. The price is currently trading at $0.4978, slightly above the ALMA (Arnaud Legoux Moving Average) at $0.4899, which serves as a short-term support level. However, the overall sentiment remains bearish, with a high likelihood of further decline.
The recent price movement has seen MATIC slightly recover from its low of $0.4602, rising by approximately 4.19% in the process. Despite this short-term rebound, the overall trend remains bearish.
The Auto Fibonacci retracement levels indicate that the price is struggling to break above the 23.6% retracement level, which coincides with the resistance level at $0.5143. If MATIC fails to stay above this level, it could lead to another wave of selling pressure.
The key support levels to watch are $0.45 and the psychological level of $0.40. The $0.45 level has previously acted as support, and a break below this level could signal a retest of $0.40, marking a significant decline.
On the upside, the level of $0.5143 acts as immediate resistance, followed by $0.55, which aligns with the 38.2% Fibonacci retracement level. Breaking these levels would require invalidating the bearish outlook and sending a potential reversal signal.