MATIC, has recently seen a remarkable surge, rising by 27.37% over the past week. As of now, MATIC is trading at $0.5274, with a robust 24-hour trading volume of $730.3 million. Despite this impressive uptick, market analysts are raising red flags, particularly concerning long-term holders and potential future corrections. Here’s a detailed look at why long-term MATIC holders might soon decide to sell, despite the current bullish trend.

Recent MATIC Price Performance

Over the last week, MATIC has experienced significant gains, with its price jumping from previous lows to its current value of $0.5274. This rally represents a notable 27.37% increase, with a recent 24-hour trading volume showcasing an 11.70% rise. This surge in price indicates strong market interest and increased trading activity for MATIC.

However, while short-term traders are enjoying profits from the recent rally, analysts are warning that the gains might not be sustainable. Technical indicators are suggesting that a price correction could be on the horizon, which could impact both short-term traders and long-term holders.

Technical Indicators Point to Possible Correction

Ali, a market analyst, has highlighted a critical technical warning for MATIC traders. According to Ali, the TD Sequential indicator on the hourly chart is signaling a potential correction. The TD Sequential is a tool used to identify possible reversal points in the market. When it signals a correction, it suggests that the current price movement might be due for a pullback.

This technical analysis implies that the recent gains in MATIC could be followed by a decline, as the market adjusts and corrects itself. Traders are advised to monitor these indicators closely as they could impact the profitability of their positions in the near term.

Long-Term Holders Facing Losses

Despite the recent price increase, a closer look at the data reveals that the majority of long-term MATIC holders are actually experiencing losses. According to IntoTheBlock data, the Global In/Out of the Money chart shows that 90.44% of addresses holding MATIC are “Out of the Money.” This means that these holders purchased MATIC at higher prices than the current market value.

To put this into perspective, 587,240 addresses are currently in a loss position, while only 5.34% of addresses, or 34,680, are in profit. Another 4.22% of addresses are at break-even. This data indicates that a vast majority of long-term holders are underwater on their investments, which could prompt them to sell if the price begins to decline.

On the flip side, active traders, who are often involved in more frequent transactions, are showing a different trend. About 79.75% of active addresses are “In the Money,” meaning they are currently holding MATIC at a profit. However, 15.58% of active addresses are “Out of the Money,” highlighting that some traders could also face losses if a correction occurs.

Upcoming Migration from MATIC to POL

Adding another layer of complexity to the MATIC situation is the upcoming transition from MATIC to POL as the native gas token for the Polygon network. Scheduled to take place on September 4, 2024, this migration will see POL replace MATIC for powering transactions and securing the network through validator incentives.

The migration will be managed via a smart contract that will convert MATIC to POL on a 1:1 basis. This automated process aims to ensure a smooth transition for users and maintain seamless operation on the Polygon network. No action is required from MATIC holders, as the contract will handle the conversion automatically.

This change is expected to affect how transactions are processed and could impact MATIC’s market dynamics as the ecosystem transitions to POL. Investors should be aware of this upcoming shift and consider its potential implications for their holdings.

Polygon Network Activity and Metrics

Despite the potential for a price correction, the Polygon network itself continues to show strong performance metrics. In the past 24 hours, the network completed 3.27 million transactions and added 55,169 new addresses. This reflects ongoing interest and activity within the Polygon ecosystem.

Additionally, the total value locked (TVL) in Polygon’s decentralized finance (DeFi) ecosystem stands at $889.09 million, with inflows of $1.67 million over the past day. These metrics indicate that the network remains active and attractive to users, even amid market fluctuations.

Conclusion

Polygon’s MATIC has recently enjoyed a substantial 27% rise, drawing attention from traders and investors alike. However, long-term holders are facing significant losses, with 90.44% of addresses currently “Out of the Money.” This situation, combined with technical indicators pointing to a possible correction, suggests that selling pressure might increase if the price starts to decline.

Furthermore, the upcoming transition from MATIC to POL as the native gas token for the Polygon network adds another layer of uncertainty. Investors should stay informed about these developments and consider how they might impact their investment strategies.