Polygon Price Drops 25% After 44% Surge Fades

Polygon Price Drops 25% Following Short-Lived Surge

Polygon’s native token, MATIC, experienced a significant price decline of 25% after reaching a two-month high of approximately $0.58 on August 25. Despite this surge, the price failed to maintain momentum, quickly falling back to a 10-day low of $0.437 by August 29. This decline continued with an additional 5% drop over the past 24 hours.

The bullish trend seen last week on the daily chart resulted in a breakout from a 50-day descending channel pattern. However, the rally was unable to break through the critical $0.60 level, leading to a rapid pullback to the previous resistance trend line. This retest, coupled with strong downward momentum, suggests a possible continuation of the bearish trend.

According to data from Coingecko, MATIC remains down 85% from its all-time high of $2.92, achieved in December 2021. The daily Relative Strength Index (RSI) has also dropped swiftly from the overbought territory, plunging below the 50% midpoint. Additionally, the MACD indicator has reversed, with the MACD line crossing below the signal line, further indicating a bearish sentiment. Consequently, Polygon’s price continues to flash warnings of a potential prolonged decline.

Increased Network Activity Amid MATIC’s Downtrend

During MATIC’s recent price correction, there has been a noticeable spike in network activity. According to Santiment, the Polygon network has been in a downtrend since the broader market pullback began in March. Despite the bearish market conditions, signs of recovery are emerging, with a notable increase in both dominant coin movement and active addresses on the Polygon network.

The number of active addresses has reached its second-highest level in 2024, standing at 3,369. Additionally, there has been significant movement of 69 billion MATIC tokens. Santiment observed that this spike in on-chain activity might indicate a potential MATIC price reversal in the near future.

• Growing adoption of decentralized applications (dApps) on the Polygon network.
• Increasing interest from developers in the scalability offered by Polygon’s Layer-2 solution.
• Higher daily transaction volume on Polygon compared to the Ethereum network.

These factors suggest that Polygon is gaining traction as a preferred platform for users due to its speed and reduced transaction costs.

MATIC Price Breaks Below Key Fibonacci Levels

The analysis of Fibonacci levels within the current falling channel pattern shows that Polygon’s bearish trend has not reached the 38.20% retracement level near $0.60. Instead, it has broken below the 23.60% retracement level at $0.50.

The next support levels for MATIC are:

• $0.40 – Initial support level
• $0.38 – Key baseline
• $0.3649 – Further downside risk, representing a potential 19% decline

If a reversal occurs following the retest and the broader market shows signs of recovery, potential resistance levels include the 23.60% Fibonacci level at $0.50 and the 38.20% level at $0.60.