A leading analytics firm reveals that the Polygon blockchain scaling solution is witnessing a drastic drop in the supply of MATIC on cryptocurrency exchanges even after the explosive rally of the token in recent days.
In a new report, Santiment says that “the crowd is building” at Polygon as the supply on crypto exchanges plummets from over a billion MATIC tokens in mid-October to 833.03 million coins on the 4th. of November.
“MATIC supply on exchanges continues to fall even as prices surge, indicating that people are quite confident in further price growth.”
MATIC is in the midst of a resplendent rally to kick off November, opening the month at $0.90 and rising as high as $1.30 for a 44% gain in less than a week.
MATIC has since pulled back and is trading at $1.17 at time of writing.
Looking at the other on-chain metrics from MATIC, Santiment says the coin’s rally comes as Polygon sees its strongest network growth in months. According to the analytics firm, the growth of the network illustrates user adoption by tracking the number of new addresses that transferred MATIC tokens for the first time.
“MATIC is experiencing its biggest network growth in months. Sustained growth of the network would be nice, but as soon as it drops and the price continues to float, forming a divergence, it tends to signal a local high as no new people come in.”
With more traders jumping in and participating in the rally, Santiment warns that one chain metric indicates that MATIC may be on the verge of a corrective move. According to the analytics firm, the coin’s seven-day market value to realized value (MVRV) metric shows that MATIC holders are in a good position to make a profit.
“MATIC’s 7D MVRV, which measures holders’ short-term profit/loss, shows that we are now in the danger zone, where we historically saw MATIC price drop shortly after as a local top forms” .
You can read the full report here.
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