Polygon (MATIC) took a break from its current bearish course, posting the sharpest rally in the crypto market this week.
Notably, MATIC price rose to $0.50 on June 23, four days after reaching $0.317, the lowest level since April 2021. This equates to a nearly 60% gain, even surpassing the performance of Bitcoin (BTC) and Ether (ETH). same time frame.
Nevertheless, MATIC is still well below its December 2021 high of $2.92, coinciding with the overall crypto bear market and a hawkish Fed putting pressure on the risk-averse asset.
MATIC “in a very large accumulation”
Meanwhile, on-chain data shows some of its richest investors are hoarding MATIC tokens despite a general downtrend.
In particular, the so-called MATIC sharks and whales are in accumulation, according to data provided by Sentiment. This includes tiers of Polygon token 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 tend to accumulate very large for about six weeks. Holders of coins ranging from 10k to 10m levels have collectively added 8.7% more to their bags over this time period. https://t.co/oasCn72rxt pic.twitter.com/lm4au2fWkn— sentiment (@santimentfeed) 22 June 2022
Interestingly, the price of MATIC is down by 50% over the same period, which underscores that many whales are confident about its long-term correction.
inverted head and shoulders
From a technical perspective, MATIC/USD is heading towards a new multi-week high.
In detail, the Polygon token has been exiting its “inverted head and shoulders,” or IH&S pattern, since June 22. The IH&S has a bullish reversal setup that follows price as three troughs in a row, while hanging upside down by a common support line called the “neckline”.
Also, the middle trough (head) of one IH&S is deeper than the other two, called the right and left shoulders, respectively. Ultimately, the setup resolves after the price breaks above the neckline, and as a rule of technical analysis, increases as much as the distance between the head and neckline.
As a result of its IH&S pattern, MATIC price could rise to $0.60 in June or early July, which is up about 20% from today.
Caution for MATIC Bulls
Whale buying is not necessarily a bullish signal, and the failure rate of the IH&S pattern is 16.5%. Hence, given the tight conditions elsewhere in the cryptocurrency and traditional markets, another price rally could also prompt whales to flip MATIC for quick gains, resulting in false recovery signals.
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Additionally, according to data from CryptoQuant, MATIC balances increased from 1.21 billion to 1.37 billion across all crypto exchanges between May 1 and June 23, indicating additional potential sell-pressure in the short term.
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