Why Polygon’s MATIC may have seen a bottom amid underperformance

Polygon MATIC, now known as POL, has been one of the most underperforming cryptocurrencies in the top 100 since the beginning of the year, declining more than 62% year-to-date. However, several key metrics on Wednesday show that its price may have seen a bottom.

MATIC is at a critical juncture that represents potential price bottom

After reaching a yearly high of $1.29 on March 13, MATIC has plunged by over 70%. While several cryptocurrencies still have a positive yearly return despite the recent market downturn, MATIC is down by 26% in the past year. The weak performance has seen 96% of its investors holding its token at a loss.

MATIC is trading around a critical price range of $0.36 - $0.39, where investors purchased over 7 billion MATIC tokens, per IntoTheBlock's data. Due to the large demand around this price, investors may defend it critically, causing a potential price bottom. However, a further decline below $0.36 could give room for more downsides.

MATIC Global In/Out of the Money

MATIC's Market Value to Realized Value (MVRV) ratio, which measures the average profit or loss of addresses that bought the token within a specific time frame, shows a similar picture. The 30-day, 60-day, 90-day, 180-day and 365-day MVRV ratios are all below the zero level, indicating investors who bought MATIC within the respective time ranges are all experiencing a loss, per Santiment data. Notably, the 365-day MVRV, at 96.9%, indicates a potential price bottom.

MATIC MVRV Ratios

Another key metric is Polygon's total value locked (TVL), which has remained relatively flat, hovering around $800 million to $900 million in the past year, per DefiLlama data. This shows a lack of new DeFi interest in its blockchain network.

MATIC could rally to $0.5812 if it crosses above 50- and 200-day SMAs

MATIC (POL) open interest is at a three-year low of $27 million, declining 93% from an all-time high of $438.8 million in February, per Coinglass data. Open interest is the total number of unsettled contracts in a derivatives market. The low OI shows investors are still displaying a risk-averse attitude toward MATIC. Its OI needs to grow to support any potential move for a rally.

On the daily chart, MATIC is trading around the $0.3773 price level — a two-year low — within a key rectangle. Prior to the low in early September, this level was last seen in June 2022, following the bearish trend after the LUNA/UST implosion.

MATIC/USDT Daily chart

On the downside, MATIC could find support around the $0.3578 level. On the upside, MATIC could rally toward the rectangle's resistance of $0.5812 if its price crosses above the 50-day and 200-day simple moving averages (SMA). A further move above the upper rectangle resistance around $0.5812 could trigger a significant rally.

The Relative Strength Index (RSI) and Awesome Oscillator (AO) momentum indicators are just below their neutral levels of 50 and 0, respectively, indicating a slightly bearish bias.

A daily candlestick close below $0.3578 will invalidate the thesis, triggering heightened bearish pressure.