Polygon investors resort to dormancy as MATIC price nears 13-month low for the second time

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• MATIC price is inching closer to $0.585, which was recently tested in June and last breached in July 2022.
• MATIC holders’ participation has declined by about 60% in the span of two weeks owing to weak price action.
• Investors are likely going to continue holding back since over 88% of all token holders are currently underwater.

MATIC price has been seeing declines for the second half of July, continuing even into August. While pretty much most of the crypto market is suffering, a polygon has managed to emerge as one of the worst performers, and this is reflected in the behavior of its investors.

MATIC price decline leaves investors dormant

MATIC price is currently trading at $0.661 after falling by nearly 23% since mid-July. In doing so, the altcoin fell through the 50-day Exponential Moving Average (EMA) as well as the $0.742 support level. The altcoin is now inching closer to $0.585, the support level that was last tested in June this year. The only time before then was back in July 2022, when the altcoin breached through it to rally ahead.

MATIC/USD 1-day chart

However, the waning optimism has left investors pulling back to the point where they are refraining from participating on the network at all. The active addresses, which measure the number of MATIC holders that have conducted transactions on the network, have declined by 60% from 4.5k to 1.8k in just two weeks.

MATIC active addresses

In all fairness, this was expected, too, since Polygon investors are some of the most loss-bearing investors in the entire crypto space. Of the 582k total addresses holding any balance of MATIC, about 88% of them are underwater, while less than 9.5% are observing any gains at all.

MATIC addresses at a loss

Since they have no incentive to move their supply around, they are willing to sit back and wait for broader market cues or network development to trigger a recovery in the altcoin and bring back their profits.

Looking at the Relative Strength Index (RSI), it is likely that recovery could be a while since the decline of the indicator below the neutral line at 50.0 suggests waning bullishness. This could pull back the altcoin to $0.585, and a bounce back from this level could help in preventing excessive losses.