Polygon [MATIC] enters accumulation phase, but all is not what it seems

• MATIC saw increased interest from whales and other addresses.
• MATIC plunged 10% at press time but bears were not in control.

Polygon [MATIC] saw a significant increase in its demand of late. According to a tweet on 13 February, one particular address snapped up over 20 million tokens over the past few days, becoming one of the largest MATIC holding addresses.

The address 0xc7728354f9fe0e43514b1227162d5b0e40fad410 of a Chinese MLM project accumulated 22.37 million MATIC in a few days, surpassing Binance: Hot Wallet2 became the fifth largest MATIC holding address. This address has consumed 100,000 MATIC gas in the past 7 days.

— Wu Blockchain (@WuBlockchain) February 13, 2023

Is your portfolio green? Check the MATIC Profit Calculator

There was a lot of interest shown by other large addresses as well. According to WhaleStats, top Ethereum [ETH] whales accumulated $128 million worth of MATIC in their portfolios, making it their fourth most widely held crypto token. 

🐳 The top 100 #ETH whales are hodling

$666,300,027 $SHIB
$146,436,746 $BEST
$139,060,980 $CHSB
$128,710,645 $MATIC
$96,545,419 $BIT
$81,023,390 $LOCUS
$61,037,825 $LINK
$60,189,488 $CHZ

Whale leaderboard 👇https://t.co/N5qqsCAH8j pic.twitter.com/4OIQYX3sdd

— WhaleStats (tracking crypto whales) (@WhaleStats) February 12, 2023

Is it the zkEVM hype?

This accumulation activity could result from Polygon’s much-anticipated zkEVM scaling solution, which has generated immense hype in the last few weeks. 

According to the documentation provided by Polygon, the solution will use cryptographic zero-knowledge proofs to validate and finalize off-chain transactions. The upgrade is touted to considerably increase network throughput and reduce gas prices. 

Recently, zKEVM core developer Eduardo Antuna shared details of the testing and highlighted that the solution helped in processing more transactions in less time. Anticipating a potential rise in MATIC’s value because of the above development, investors could have accumulated the token en masse. However, the launch date had not been made official until press time.

Really excited about our results on the @0xPolygon zkEVM Prover! Batchproof 2:30 (2min soon) ~500 or ~250 ERC20 tx/batch🚀On a spot m6id.metal prover’s cost: $0.064/proof ($0.0001/tx) The fastest ZK tech and the first production-ready zkEVM💪The prover is no longer a bottleneck🍾

— Eduardo Antuña 🦇🔊 (@eduadiez) February 9, 2023

MATIC falters, but a rebound cannot be ruled out

Data from Santiment corroborated the aforementioned accumulation theory. Small and large whales steadily increased their MATIC holdings over the last few days.

Source: Santiment

However, all was not well. MATIC’s network growth declined sharply since the start of February, indicating that new addresses stayed away. The negative MVRV Ratio showed that the network was unprofitable for long-term holders.

Investor sentiment slipped into the negative region as well.

Source: Santiment

Realistic or not, here’s MATIC market cap in BTC’s terms

MATIC felt the heat at press time. The token plunged 8.46% from the previous day to settle at $1.17, per data from CoinMarketCap. Over the last seven days, it lost 12% of its value. The $1.16 level has acted as a good support in the past and a dip below this level will increase bearish sentiment. 

MATIC’s Relative Strength Index (RSI) retreated but hovered along the neutral level, which meant that bears had not taken control till press time. 

The On Balance Volume (OBV) faced resistance, and a breach of this level will consolidate the idea of MATIC’s upward movement in the long run.

Source: TradingView MATIC/USD