Whales are quietly sizing up on this Ethereum Layer 2 token

During times of muted volatility, it is better to be in the trenches instead of figuring out if and what button you should be clicking. And whales are doing exactly that with Polygon (MATIC), a well-known Ethereum Layer 2 token. 

Also read: Polygon price needs to reset before MATIC bulls can trigger 60% upswing

Polygon whales accumulate

Polygon has strong fundamentals and was expected to perform in 2024, as noted in a previous FXStreet publication. It did, for a short time, but its year-to-date performance is negative 31%, which is ugly compared to some popular altcoins. But these on-chain data points suggest that a massive move could be on its way. 

Studying investor sentiment is the most important step when checking the network's health. According to Santiment’s Market Value to Realized Value (MVRV) indicator, the average profit of investors who bought MATIC in the past month is close to zero. The 365-day MVRV shows that investors who purchased this Layer 2 token are sitting at an average loss of 14%. 

This indicator is used to assess the average profit/loss of holders of a certain token and can be used as a buy/sell signal. The idea behind this metric is that if the average profit is too high, it can be a sell signal since panicking investors could sell to realize their gain. On the other hand, if investors are underwater, the chances of offloading their holdings at a further loss are unlikely.

In conclusion, the 30-day MVRV hints at no short-term selling pressure, but the 365-day MVRV suggests that it is time to buy the dips.

MATIC MVRV 30-day, 365-day 

The next set of indicators shows what investors are actually doing, not what they think. The Active Addresses metric and the Network Growth metrics have been on an uptrend since 2024 but have picked up pace since May 7. The 7-day moving average for both of these indices shows a rapid ascent.  

A combination of these indicators suggests an inflow of new capital and a growing interest in existing ones.

MATIC Active Addresses and Network Growth

To finally seal the deal and actually show the whales’ movement, the Whale Transaction Count and Supply Distribution indices will be used. The April 14 crash attracted transfers worth $100,000 or more, aka Whale Transaction Count, which shows that high networth individuals were buying the MATIC on the dips. These investors’ activity saw an unusual spike after May 20 and is likely to continue. 

MATIC Whale Transaction Count

The Supply Distribution by balance of addresses shows that whale addresses holding between 100,000 to 1 million and 1 million to 10 million MATIC tokens saw a massive growth since the April 13 crash. The first cohort’s holdings increased by 2 million tokens, while the second group by 41 million coins. 

MATIC Supply Distribution

All in all, these on-chain data points say but one thing – whales are actively buying MATIC tokens.