Polygon price could fall further as increasing number of MATIC holders sit on losses

Polygon network’s native token, MATIC, suffered a double-digit decline in the past week. The cryptocurrency shaved 15% off its price within a 7-day timeframe, and MATIC price is still at risk of further declines.

Also read: XRP decline could grind to a halt if Ripple settles lawsuit with SEC, retail traders continue accumulation

MATIC slips below a key supply zone, risks price decline

MATIC, one of the largest Layer 2 scaling tokens, slipped below the crucial supply zone that spans $0.84 to $0.86 on Tuesday. As seen in the In/Out of the Money indicator on IntoTheBlock, 14,240 wallet addresses bought 4.13 billion MATIC tokens in the $0.84 to $0.86 price range. 

In/Out of the Money indicator for MATIC

MATIC price is exchanging hands at $0.7771, at the time of writing, and the longer Polygon price remains below the crucial zone, the higher the risk of a likely sell-off from the 14,240 wallet addresses that acquired MATIC at this price level. Holders of the Layer 2 token might sell the asset to avoid incurring more significant losses, increasing the selling pressure on MATIC. 

These on-chain metrics support MATIC price decline thesis

Network Realized Profit/Loss (NPL) is an on-chain metric that calculates the average daily profit/ loss of all token transactions. It helps determine whether an asset’s holders are booking profits or losses at a given price level.

For MATIC, there are consistent spikes in NPL from November 4 to November 22. This implies MATIC holders sold the token at profits, and engaged in profit-taking in this time frame. Typically profit-taking is bearish for the asset’s price, since it increases the selling pressure. 

MATIC NPL and price 

Another key metric, supply on exchanges as a percentage of total supply, that tracks the selling pressure on MATIC, observed an increase. Between November 10 and 22, supply on exchanges climbed consistently, from 7.98% to 8.80% while the exchanges, both centralized and decentralized, noted MATIC token inflows. This metric supports a bearish thesis for the asset’s price. 

MATIC exchange flow balance and supply on exchanges

At the time of writing, MATIC price is $0.7771, the altcoin’s price has remained largely unchanged in the past 24 hours.