In the first quarter of this year, Polygon (MATIC) saw price spikes with much more serious investor enthusiasm. However, the excitement waned and the price fell. After investors bought in anticipation of the zkEVM update, they didn’t see the expected bullish wave. Now, the general negative sentiment in cryptocurrency markets is supporting the decline.
Polygon (MATIC) price is down 45% from its 2023 peak recorded on April 18. According to on-chain data, the Shapella upgrade did not turn out well for MATIC Coin. Investors quickly withdrew their funds from the network after the major Ethereum update. This may indicate that investors are expecting further declines in the coming days. The 30-day price drop was the result of a sell-off that has been unprecedented in the past.
Many altcoins are in a similar situation, with investors reducing their exposure to altcoins. Worse, reduced liquidity on centralized exchanges is enabling these sell-offs to create deeper lows. When the Bitcoin price started to fall from $30,000, experienced investors signaled the meltdown in altcoins.
MATIC Coin Comment
After years of serving as the main Proof of Stake and alternative scaling solution for Ethereum, interest in Polygon is waning following the success of the April 12th Shanghai Upgrade. The graph below shows how the percentage of MATIC staked on smart contracts started to fall just a week before the Shanghai Upgrade, which marked Ethereum’s full transition to PoS consensus.
When the supply locked in smart contracts starts to fall, the supply on exchanges starts to increase. This means more tokens are available for sale and the price falls. This is not a factor that affects the price alone. For Ethereum, for example, even though the supply on exchanges is at historic lows, the price is falling due to the meltdown in the Bitcoin price. The situation in MATIC can be directly linked to the decline, as it started 1 week before the Ethereum update.
According to data from blockchain analytics platform Glassnode, MATIC’s supply on exchanges appears to be one of the driving factors behind the current price drop. The purple line in the chart below shows how MATIC Supply on Exchanges started to increase just before the Shanghai Upgrade.
In terms of price, the support of $ 0.83 is an important level and in the scenario where this region is lost, we can see the price drop to $ 0.75. Reasons such as the possibility of the Bitcoin price falling below $ 25,000 and the increasing supply of MATIC Coin on exchanges indicate that a decline close to these levels is likely.