Polygon (MATIC) departed from its predominantly bearish trajectory, posting one of the sharpest rallies in the cryptocurrency market this week.
Notably, MATIC price has risen to $0.50 on June 23, four days after hitting $0.317, its lowest level since April 2021. This is a gain of roughly 60%, outperforming even Bitcoin (BTC) and Ether (ETH) in the same period of time.
However, MATIC remains significantly off its December 2021 high of $2.92, coinciding with the overall bear market in cryptocurrencies and a tighter Fed putting pressure on risk assets.
MATIC is “in a pretty big build-up phase”
Meanwhile, some of its wealthiest investors have been hoarding MATIC tokens despite the overall downward trend, on-chain data suggests.
In particular, MATIC’s so-called sharks and whales have been amassing, according to data provided by Santiment. That includes the levels of Polygon holders ranging from 10,000 to 10 million coins, who “have collectively added 8.7% more to their bags” since May 9.
$MATIC sharks and whales have been in a pretty big accumulation trend for about six weeks. The tiers of holders ranging from 10k to 10m coins held have collectively added 8.7% more to their bags in this timespan. https://t.co/oasCn72rxt pic.twitter.com/lm4au2fWkn
— Santiment (@santimentfeed) June 22, 2022
Interestingly, the price of MATIC has dropped by 50% in the same period, which shows that many are confident in its long-term recovery.
Reverse head and shoulders pattern
From a technical point of view, the MATIC/USD pair appears to be heading towards a fresh multi-week high.
In detail, the Polygon token has been breaking its “inverse head and shoulders” pattern, or IH&S, since June 22. The IH&S pattern is a bullish reversal setup that forms after the price forms three troughs in a row while hanging higher from a common support line called the “neckline.”
Also, the central channel of an IH&S (the head) is deeper than the other two, called the right and left shoulders, respectively. Ultimately, the setup resolves after price breaks above the neckline and, as a rule of technical analysis, goes as high as the distance between the head and the neckline.
As a result of its IH&S pattern, MATIC price could rise towards $0.60 in June or early July, 20% higher than today.
MATIC Bulls Caution
Buying whales is not necessarily a bullish sign, and the IH&S pattern has a 16.5% failure rate. Therefore, a further price rally could also prompt whales to sell MATIC for quick profits, given tight conditions elsewhere in the crypto and traditional markets that could lead to false signs of recovery.
Additionally, the MATIC balance across all cryptocurrency exchanges has jumped from 1.21 billion to 1.37 billion between May 1 and June 23, according to data from CryptoQuant, indicating potential additional short-term selling pressure. term.
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