MATIC Price Plunge: Factors Contributing to its Recent Dip

MATIC Price Plunge: Factors Contributing to its Recent Dip

The price of Polygon (MATIC) is signaling that it has started to fall after a month-long rise. This follows an uptrend that has been ongoing since December. Last week, Polygon released positive updates on MATIC prices and network activity. Polygon has officially eclipsed Ethereum in terms of the number of users actively using the platform on a daily basis. The current number of users on the Polygon network is 340,000, far exceeding Ethereum’s 320,000. In just two weeks, the price has increased by 21%. Finally, MATIC’s price surpassed Solana’s (SOL) and reached the top 10 of all cryptocurrencies by market capitalization.

Why the decline?

During the prolonged bear market, Polygon made many advances and developments. 

Then, the cost of MATIC led to the exhaustion of the existing energy supply, the first sign of a crisis.

In September 2022, the price of MATIC fell from the horizontal resistance area to $0.77. This was a crucial development for the course of the current price formation, as the area had been active for more than two years at that time, except for a brief breakdown in June. 

From that point on, the price of the MATIC token peaked twice, leading to lower lows in the market overall. Since the second price spike in December last year, Polygon’s costs have risen significantly, which began to frustrate investors.

The signals sound very positive

MATIC’s weekly RSI data continues to show that an optimistic outlook is warranted. This is exactly the reason why the stock continues to be closely watched by many investors. 

According to these signals, MATIC’s value has reached a point where it is above 50, which is a positive sign. This indicates that the support line is correct. 

Note: This is also considered an important indicator that the current trend is going in the wrong direction!

In this situation, the indicator readings and price action could point to a rally towards the next resistance zone at $1.38. The resistance zone is located at $1.38. This optimistic price forecast could prove to be wrong if the weekly closing price of Bitcoin falls below $0.77. In this case, there is a possibility that the price will fall to $0.40.

The MATIC costs have eliminated the energy supply!

The MATIC costs have eliminated the energy supply!

The announcements make it clear that the production costs of some coins (as we have already seen with Bitcoin and Ethereum) can offset the profits to be made with these coins. In such cases, there will be a quick withdrawal from mining. 

Of course, this withdrawal need not be permanent. For other reasons (as in the case of Bitcoin), these costs may automatically rise due to a spontaneous increase in the price of the coin. 

Unfortunately, this does not seem to be the case with MATIC at the moment. Although we can’t say anything definite about this at the moment, it is certain that this will be a problem in the long run.

You might be interested: Litecoin: What Makes it Different From Other Cryptocurrencies?