Polygon (MATIC) took a break from its prevailing bearish course and posted one of the strongest rally in the crypto market this week.
Notably, the price of MATIC soared to $0.50 on June 23, four days after hitting $0.317, its lowest level since April 2021. This equates to a gain of about 60%, boosting the performance of even Bitcoin. (BTC) and Ether (ETH) in the same time frame.
MATIC/USD daily price chart. Source: TradingView
Nevertheless, MATIC is still significantly down from its December 2021 high of $2.92, coinciding with the general crypto bear market and an aggressive Fed putting pressure on risky assets.
MATIC “in quite a large accumulation”
Meanwhile, some of the wealthiest investors have accumulated MATIC tokens despite the general downward trend, on-chain data suggests.
Notably, the so-called MATIC sharks and whales have piled up, according to data from Santiment. That includes the levels of Polygon token holders ranging from 10,000 to 10 million coins, who have “collectively added 8.7% more to their bags since May 9.
$MATIC sharks and whales have been in a pretty big accumulation trend for about six weeks now. The tiers of holders, ranging from 10k to 10 million coins, collectively added 8.7% more to their bags over this period. https://t.co/oasCn72rxt pic.twitter.com/lm4au2fWkn
— Santiment (@santimentfeed) June 22, 2022
Interestingly, the price of MATIC has fallen by 50% over the same period, underlining that many whales are confident in the long-term recovery.
Reversed head and shoulders
From a technical standpoint, MATIC/USD appears to be heading for a new multi-week high.
In detail, the Polygon token has been breaking out of its “inverse head and shoulder” or IH&S pattern since June 22. IH&S is a bullish reversal setup that forms after the price forms three troughs in a row as it hangs upside down on a common support line called the ‘neckline’.
Also, the middle trough of an IH&S (the head) is deeper than the other two, called right and left shoulders, respectively. Finally, the lineup is resolved after the price breaks above the neckline and, as a rule of technical analysis, rises by as much as the distance between the head and the neckline.
MATIC/USD four hour price chart. Source: TradingView
As a result of the IH&S pattern, MATIC’s price could rise to $0.60 in June or early July, about 20% higher than today.
Beware of MATIC bulls
Buying whales is not necessarily a bullish signal, and the IH&S pattern has a failure rate of 16.5%. So a further price rally could also prompt whales to flip MATIC for a quick profit given the tight conditions elsewhere in the cryptocurrency and traditional markets that could result in false recovery signals.
Related: ‘Bitcoin Dead’ Google Searches Hit New All-Time Record
In addition, the MATIC balance across all crypto exchanges jumped from 1.21 billion to 1.37 billion between May 1 and June 23, according to data from CryptoQuant, pointing to additional potential short-term selling pressure.
Polygon exchange reserves. Source: CryptoQuant
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.