- Polygon burned over 650K MATIC tokens quarter-to-date.
- MATIC/USD price chart flashed a bearish Descending Triangle.
- The momentum-based oscillators joined the forecast.
YEREVAN (CoinChapter.com) – Polygon, “Ethereum’s internet of blockchains,” announced on Monday that it burnt over 650,000 MATIC tokens since implementing the Ethereum Improvement Proposals (EIP-1559) burn mechanism in Jan. 2022. The Network also added that the dollar equivalent of the burnt tokens is “inching” its way close to 1 million.
The EIP-1559 entails a three-step process for MATIC burn. It is first initiated on Polygon but then continued on the Ethereum blockchain. The procedure is similar to Polygon’s withdrawal transaction, but instead of sending MATIC to a user address, the system burns them and removes them from the total supply.
Additionally, each time a user pays for a transaction, Polygon locks the base fee on the burnt contract and pays the priority fee to the validator. Notably, the Polygon token has a fixed supply of 10 billion. But, according to the platform’s analysis, it will burn 0.27% of the total supply per year.
Meanwhile, MATIC/USD exchange rate plummeted nearly 50% since the burn mechanism implementation and hinted at further losses.
MATIC daily chart bearish
MATIC traded at $1.3 in Monday’s New York session, after a 17% decline month-to-date. The digital asset formed a bearish setup dubbed the Descending Triangle. The formation entails a flat support line that prevents breakdowns, and a negative-sloped resistance, capping the upside attempts.
As mentioned, the setup is bearish. Thus, it predicts a drop after MATIC exhausts the formation. On Apr 25, MATIC/USD price action arrived at the Triangle’s support, meaning the next session will determine if the prediction has merit.
Additionally, momentum indicators such as the MACD (green/red histogram) and the relative strength index (RSI) joined the bearish forecast. The MACD printed red bars on the histogram, while the RSI slid below 35. In detail, it measures the magnitude of recent price changes to analyze overbought or oversold conditions.
Furthermore, the lowering trading volumes signify that the bulls are not ready to put insufficient weight behind the rally. Not to mention, Polygon token price greatly depends on the climate across the cryptocurrency market, which stems from broader economic conditions.