Polygon’s MATIC Breakout Fizzles, Price Drops 25%

• MATIC dropped 25% after failing to sustain momentum above $0.60.
• Technical indicators show increasing bearish sentiment, with potential further downside risks.
• Despite price decline, Polygon network activity is rising, driven by dApp adoption.

Polygon (MATIC) , recently took a 25% hit, dropping from a two-month high of $0.58 on August 25 to a low of $0.437 by August 29. Despite earlier optimism, the price couldn’t maintain its upward momentum, signaling potential trouble ahead.

Struggling to Break Out

MATIC’s brief rally last week, which broke through a 50-day descending channel , initially looked promising. However, it quickly ran into resistance at $0.60 and failed to hold the gains. 

The price then rapidly retraced to its previous resistance trend line. This quick reversal suggests that the bearish trend could continue.

Technical indicators are not encouraging. The Relative Strength Index (RSI) dropped sharply from overbought levels and fell below the 50% mark. 

Additionally, the MACD indicator has reversed, with the MACD line dipping below the signal line. These shifts point to a growing bearish sentiment, suggesting more downside risks for MATIC.

Network Activity Amid Price Slump

Interestingly, while MATIC’s price is struggling, the Polygon network itself shows signs of increased activity. According to Santiment, the number of active addresses on Polygon has surged, reaching its second-highest level in 2024. 

This boost is likely driven by the growing adoption of decentralized applications (dApps) and developer interest in Polygon’s scalable solutions. From a technical standpoint, MATIC has dropped below key Fibonacci levels. 

MATIC failed to hold the 23.60% level at $0.50, and now the next support level is at $0.40, with further potential declines down to $0.3649. If the price reverses, however, resistance levels are set at $0.50 and $0.60.

Adding to the mix, Binance has announced it will support Polygon’s token migration from MATIC to POL, scheduled for September 4. This transition could impact the token’s price dynamics as the market adjusts to the changes. 

MATIC’s future looks uncertain, with technical indicators and network activity pulling in different directions. Investors should keep a close watch as the token navigates these choppy waters.