Crypto currency market is currently excited due to Bitcoin reaching its highest level in several years, which also influenced the price of Polygon (MATIC), which has increased by over 57% in the past month. The popular altcoin MATIC started an absorbent rise despite the negative events. Last month, Polygon’s price experienced significant increases and reached $1.12 at the time of writing. Unlike Bitcoin, MATIC faced significant resistance throughout February, but investor support continued the rise and pushed the cryptocurrency to its highest level in 11 months.
Pressure on MATIC Sales
Similarly, investor selling pressure could trigger a decline in the MATIC price. The total supply of MATIC on exchanges has shown an increase of 100 million MATIC over the last 12 days, bringing the total to 1.2 billion MATIC. An increase in exchange supply can often indicate an intention to sell. Additionally, during rally periods, this situation can be an indicator of profit booking. Considering that the bullish sentiment may be temporary, MATIC holders may prefer to secure their profits before any corrections occur.
However, these data could pose the biggest threat to Polygon’s price increase because these investors are known for their rapid buying and selling. MATIC’s concentration has doubled from 3.9% to 7.8% in just two weeks, and they currently hold tokens worth approximately $782 million. If these investors choose to sell their assets to realize profits, the altcoin could face significant resistance against further rises and could even potentially experience a decline on the daily chart.
Bitcoin’s Impact on MATIC
MATIC price is currently near testing the critical resistance level of $1.18. This level, historically proven to be a solid support level, could generally be the first step towards a rise above $1.20. BTC‘s price on Monday reached a new yearly high of $68,359. If BTC continues this rally, MATIC could see further gains due to a positive correlation of 0.9 with Bitcoin.
This high correlation could mean that MATIC might follow the momentum generated by BTC if it cannot follow the path created by its own supply and demand. If the MATIC price continues to rise, it could turn the $1.18 resistance level into support. However, if it cannot overcome this barrier, it could fall back to $1.05. A daily candlestick close to this line could leave the altcoin vulnerable to a drop to $0.95 and invalidate the bullish thesis.
