MATIC charts a new ATH: is the top in?

In a week where Bitcoin and the majority of the crypto market continued to meander about and mostly consolidated within the same general corridor, MATIC has...not.

MATIC, 1-month price action (Source: Sanbase)

The fourth IEO held on Binance Launchpad, MATIC coin has maintained a resolute upward trend for the past two weeks, recording a brand new all-time-high of $0.041 earlier today.

From a fundamental POV, there are a few possible culprits for the surprise rally, including several new partnerships and reasonably bullish news announced as of late. The incline first began back on November 22nd, when MATIC revealed their token’s integrating with the Monolith Debit Card:

Since then, there have been several rally-prolonging announcements from the project, including integrations with TradeStars and MintFlint, as well as a recent, Matic-themed NFT sale in collaboration with Chain Guardians.

The second leg of the MATIC rally in particular (beginning on December 3rd) has likely been propelled by the launch of Season 1 crate sale for Battle Racers - a blockchain-based racing game - on the Matic network.

The ongoing breakout has rightly landed MATIC on our list of top 10 developing stories on crypto social media both yesterday as well as today. As of this writing, Sanbase has recorded over 600 new mentions of the coin on crypto social media in the last 48 hours, with the rise in MATIC-themed chatter clearly mirroring the price rally, as it has several times in the past:

Amount of 'MATIC' mentions on crypto social media, last 3 months (Source: Sanbase)
Spikes in unique social volume for 'MATIC' correlating with the rally (Source: Sangraphs)

So what does the data say about the MATIC pump so far - and where we might go from here?

In terms of its on-chain activity, MATIC has experienced an uptick in both the number of daily addresses interacting with its coin (daily active addresses) as well as the number of new addresses created on its network (network growth) since the rally started:

Network Growth and Daily Active Addresses for MATIC, last 6 months (Source: Sanbase)

What are these addresses doing? Well, at least some of them are taking advantage of the action: there have been a number of recent bumps on MATIC’s exchange flow balance chart, indicating large amounts of the coin being periodically moved to exchanges:

Exchange Flow Balance for MATIC, last 1 month (Source: Sanbase)

As expected, Binance accounts for most of the MATIC trading volume over the past two weeks. On-chain, however, there have been two notable spikes in the number of deposit addresses sending MATIC to Binance: one at the very start of the rally - possibly spearheaded by whales and those ‘in the know’ - and the second spike that’s forming as we speak, as Joe Retail finally decides to join the party in droves:

Number of MATIC deposits to Binance, last 6 months (Source: Sandata)

It’s worth noting that the actual volume of MATIC sent to exchanges recently still pales in comparison to the early October spike, when HODLers rushed to take advantage of the first rally in over 2 months:

Other on-chain metrics also seem to support the ‘whales, then fish’ theory: the top 100 non-exchange MATIC addresses began moving their coins as soon as November 23rd, with the offloading still going. At the start of the rally, these addresses held 79% of MATIC’s total circulating supply. Today, that number stands at 77.5%, meaning they moved 1.5% of the coin’s total supply, or roughly 150,000,000 MATIC (about $6m currently) in the past 2 weeks.

Cumulative balance of top non-exchange MATIC addresses, as % of total MATIC supply (Source: Sandata)

Coincidentally, the top exchange wallets have added 1.5% of MATIC’s total circulating supply to their holdings in the same time frame - going from 19.9% on November 22nd, to 21.4% today.

Cumulative balance of top exchange MATIC addresses, as % of total MATIC supply (Source: Sandata)

This whale positioning is also evident if we look at the recent behavior of addresses holding between 1m-10m MATIC, which moved 25m MATIC in the 3 days before the rally started (November 19th - November 22nd), and then another 34m MATIC over the next 4 days.

Cumulative balance of addresses holding 1m-10m MATIC (Source: Sandata)

On the other hand, retail traders have mostly been buying into the rally. For their own part, addresses holding 1k - 10k MATIC have added another 800,000 MATIC to their collective bags since the uptrend began:

Cumulative balance of addresses holding 1000-10000 MATIC (Source: Sandata)

So we’re seeing a clear uptick in speculative activity on the network, which is really no surprise. However, that brings us to the million MATIC question - where do we go from here? Can MATIC sustain the rally into the next week, or are we close to the peak?

Here are the data-driven arguments for both sides.

A common precursor of a forming top is a notable divergence in on-chain activity and price. As the amount of active addresses and transactional activity begins to plateau or decline during a rally, it can indicate a waning interest in the asset and often make it impossible for the price to sustain its rally. Pair that with a coin’s appearance on our top emerging trends - indicative of peak hype - and a correction is often imminent.

This exact setup happened on December 1st: Matic made it on our emerging trends list, followed by a notable drop in both daily active addresses and on-chain transaction volume.

However, what seemed to be a top turned out to be a fakeout! On-chain activity rebounded on December 2nd and 3rd, and the Battle Racers crate sale re-fueled the MATIC hype train:

Matic appearing on our Trending Words, plus a drop in Daily Addresses and Trx Volume (Source: Sanbase)

Since then, the number of daily addresses interacting with the coin has continued to grow, and is slowly approaching the ATH recorded back on May 20th, the previous MATIC top:

MATIC Daily Active Addresses, all time (Source: Sanbase)

The same pattern holds true for MATIC’s network growth, as the number of new addresses created on the network continues to increase:

MATIC Network Growth, 6 months (Source: Sandata)

Personally, I’d want to see these two metrics begin to slow down before proclaiming the top is in. For now, the on-chain activity continues to mirror MATIC’s price action, supporting the coin in its bid to sustain higher highs.

On the other hand, MATIC’s social indicators appear increasingly bearish. The coin has resurfaced on our list of emerging trends today, with its current social volume quickly approaching the levels reached at MATIC’s late June top:

Amount of 'MATIC' mentions on crypto social media, last 6 months (Source: Sanbase)

Outside just the pure amount of MATIC talk, the general crowd sentiment is also turning increasingly bearish, as the data suggests a declining faith in the coin both on Telegram and Reddit:

Crowd Sentiment towards MATIC on Telegram (Source: Sangraphs)
Crowd Sentiment towards MATIC on Reddit (Source: Sangraphs)

And while MATIC’s daily addresses have continued to grow, the actual amount of value transacted on the network has slowly been trending downwards:

MATIC on-chain transaction volume, 1 month (Source: Sandata)

These are all indicators that MATIC might be nearing the end of its monster rally, but as I already mentioned, it may very well depend on whether the network activity continues to trail the PA over the weekend, or finally begins to diverge south.

And lastly, one final word of advice: even if you missed this MATIC rally, it might be prudent to keep an eye on the project's development activity for future entry points. The last 3 MATIC rallies have all been preceded by a spike in the MATIC team's github activity, possibly indicative of new feature rollouts or upcoming partnership announcements:

MATIC development activity, last 6 months (Source: Sanbase)

In the meantime, stay safe out there!

Thanks for reading!

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