Amid a broader downturn in the cryptocurrency market, the Polygon (MATIC) price has followed suit, with the price falling below the $0.9 mark for the first time in 6 weeks. This decline in value comes amidst increased concerns regarding a potential drop in the price of Bitcoin, which has spurred sellers into action, resulting in losses over the past 24 hours. Since its peak of $1.26 in mid-March, the MATIC Coin has been experiencing a consistent loss in value, raising questions about its future trajectory.

                                            MATIC/USD 24-hour price chart (source: CoinMarketCap)

MATIC Returns to Long-Term Support

The technical analysis of the daily time frame reveals that the MATIC price has been trading within a long-term ascending parallel channel since October 2023. Both the resistance and support trend lines of this channel have been validated three times.

However, recent events have seen MATIC being rejected by the channel's resistance trend line on March 13, leading to a nearly 30% decline since then. As of April 3, MATIC has reached the channel's support trend line, which has held for approximately 170 days. The critical question now is whether MATIC will bounce back from this support or break down further.

Short-Term Bounce Likely, Long-Term Trend Uncertain

Analyzing the daily RSI and MACD, both indicators are showing bearish readings. The RSI is currently below 50, and the MACD is in negative territory. Despite a potential bullish divergence forming in the MACD, it's not sufficient to offset the bearish signals from other indicators. Switching to a shorter time frame, a four-hour chart suggests a short-term bounce for MATIC.

                                                    MATIC/USD 24-hour price chart (source: TradingView)

The RSI and MACD in this time frame has generated bullish divergence, particularly at the channel's long-term support trend line. If a bounce occurs, MATIC is likely to break out from its descending resistance trend line and rise toward the channel's midline at $1.13. However, failure to sustain this bounce could lead to a breakdown below the long-term channel, potentially resulting in a 20% drop to the $0.70 support area.

On-chain Data Indicators Suggest Accumulation Phase

On-chain data indicators point towards a potential accumulation phase for Polygon's MATIC, with the Market Value Relative to Realized Value (MVRV) ratio currently at -14.75%. This ratio suggests losses, which could lead to accumulation.

Moreover, trading above the $0.88 support level and the 100-day Exponential Moving Average (EMA), there's a possibility of a rebound to retest the $0.92 resistance and beyond. Historically, when MATIC's MVRV falls within the range of -5% to -15%, it often precedes rallies, making this zone an opportunity area for investors.

                                                       MATIC/USD 4-hour price chart (source:  TradingView)

If the Polygon bulls decide to charge in, it could result in a significant uptick in MATIC's price. Currently trading above the $0.88 support level, which coincides with the 100-day EMA, there's potential for a rebound to retest the $0.92 resistance. This price level has historically acted as a strong support, providing momentum for MATIC to surpass the $1.0 threshold. However, a decline below the $0.88 support level could lead to further losses, potentially down to $0.81 and even $0.80.

Furthermore, recent announcements regarding the forthcoming "Napoli upgrade" for Polygon bring additional attention to the project. This upgrade includes enhancements to parallel execution and new operational codes for the Ethereum Virtual Machine (EVM). As the implementation of the Napoli upgrade progresses, it could positively impact MATIC's price performance.