Polygon (MATIC) paused in its current bearish price, posting one of the sharpest rallies in the crypto market this week.
Notably, the price of MATIC rose to $0.50 on June 23, four days after hitting $0.317, its lowest level since April 2021. This represents a gain of around 60%, even surpassing the performance of Bitcoin ( BTC) and Ether (ETH) within the same time frame.
Nevertheless, MATIC is still down significantly from its high of $2.92 in December 2021, coinciding with the overall crypto bear market and a hawkish Fed putting pressure on risky assets.
MATIC “in a fairly large accumulation”
Meanwhile, some of its wealthiest investors have been hoarding MATIC tokens despite the overall downward trend, on-chain data suggests.
Notably, so-called MATIC sharks and whales have been accumulating, according to data provided by Santiment. This includes Polygon token holder levels 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 fairly large accumulation trend for about six weeks. Holder levels ranging from 10,000 to 10 million coins held have collectively added 8.7% more to their bags over this period. https://t.co/oasCn72rxt pic.twitter.com/lm4au2fWkn
— Santiment (@santimentfeed) June 22, 2022
Interestingly, the price of MATIC has fallen by 50% over the same period, underscoring that many whales are confident of its long-term recovery.
Head and shoulders reversed
From a technical standpoint, MATIC/USD appears to be heading for a new multi-week high.
In detail, the Polygon token has been coming out of its “reversed head and shoulders”, or IH&S model, since June 22. IH&S is a bullish reversal setup that forms after price has formed three bottoms in a row while hanging upside by a common support line called the “neckline”.
Also, the central hollow of an IH&S (the head) is deeper than the other two, called the right and left shoulders respectively. Ultimately, the pattern resolves after prices break above the neckline and, as a rule, technical analysis increases by as much as the distance from the head to the neckline.
Due to its IH&S pattern, the price of MATIC could rally towards $0.60 in June or early July, up around 20% from today.
Watch out for MATIC bulls
Buying whales is not necessarily a bullish signal, and the IH&S model has a 16.5% failure rate. Thus, a further rise in price could also prompt whales to flip MATIC for a quick profit, given the challenging conditions elsewhere in the cryptocurrency and traditional markets that could lead to false recovery signals.
Related: “Bitcoin dead” Google searches hit new all-time high
Additionally, the MATIC balance across all crypto exchanges increased from 1.21 billion to 1.37 billion between May 1 and June 23, according to data from CryptoQuant, indicating additional potential selling pressure in the near term.
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