Polygon: Why it’s not the right time to buy MATIC

• Despite being close to the opportunity zone, MATIC might struggle to bounce.
• The token seems to have fallen into the bear phase, indicating that the price might go lower.

If you ask many traders, they would most likely tell you that Polygon’s [MATIC] 43.28% fall should have provided a solid buying opportunity. But AMBCrypto found that activating the buy button at press time could be risky.

However, this assertion was not without concrete evidence. As of this writing, MATIC’s price was $0.60. The last time the token hit or surpassed $1 was in March.

MATIC is on the line

Leading this bias was Polygon’s Sharpe Ratio. The Sharpe Ratio determines if the possible gains when compared to the risk are at a good level.

A positive reading of the ratio suggest that the risk-to-reward ratio could be worth it. However, for MATIC, the Sharpe Ratio was -2.16.

This means that the risk of buying MATIC at $0.60 might not be worth the reward the cryptocurrency might occur in the short term.

Source: Messari

As such, it could be better to wait for a lower price before accumulating. However, it is also important to check the Market Value to Realized Value (MVRV) ratio.

The MVRV ratio can be used to spot opportunity (buying) and danger (selling) zone using the profitability holders have in the market.

Historically, MVRV ratios between -14% and -28% have proven to be a good accumulation position before a price increase.

For example, in October 2023 when the price of ratio was -17.60%, Polygon’s price jumped from 0.51 to 0.94 in November.

A similar scenario happened in January as the token went from $0.73 to $1.27 in less than three months.

Source: Santiment

Are bears now in control?

Looking at MATIC’s current stance, the price has the potential to rise

Furthermore, AMBCrypto looked at the MVRV Long/Short Difference. With this metric, traders can tell if a cryptocurrency has fallen into a bear phase or is in a bull stage.

A reading below 0 implies that a token is down to the bearish region. Meanwhile, if the Long/Short Difference is above 1, it means that the cryptocurrency is in thriving in the bull market.

For Polygon’s native token, the metric was -13.37%. This means that bulls have not had a say in the price movement for some time. Should this continue, the value of the token might continue to decrease.

Source: Santiment

Is your portfolio green? Check out the MATIC Profit Calculator

However, a rise in buying pressure could save the day for the MATIC. In the meantime, the total supply of MATIC in profit had dropped from a peak of 8.45 billion to 2.45 billion.

This means that there were a lot of participants holding the token at an unrealized loss. Whether these holders would survive the underwater spot depend on MATIC’s price performance.