Polygon’s price plummeted, erasing all the gains it made earlier this year despite strong fundamentals, including increased market share in the payments industry and increased burn rate.
summation
- Polygon’s price plummeted, erasing most of the gains it made earlier this year.
- Data shows a surge in payment transaction volume over the past few months.
- Technical analysis shows that the token is likely to bounce in the coming weeks as it forms a double bottom pattern.
Polygon (POL), formerly known as MATIC, was trading at $0.095, down sharply from this year’s high of $0.1853. It is still well below the all-time high.
The POL price crash coincided with an ongoing cryptocurrency market decline affecting Bitcoin and most altcoins. This also happened when Vitalik Buterin criticized layer 2 networks. He believes that these networks will struggle in the future, as Ethereum has largely solved some of the scaling issues it had in the past.
Ethereum is now much faster than it was a few years ago, and future upgrades will make it even faster. Additionally, transaction costs have continued to fall over the past few years.
Buterin believes that the layer 2 networks that will survive are those that solve key challenges and focus on key niche markets. Polygon focused on the payment industry and achieved great success in it.
For example, our data shows that it has the second highest number of monthly USDC addresses after Solana. Stablecoin P2P transfer volume surges to over $39 billion. The top player using the chain is Tazapay, which processed more than $687 million in January.
Revolut processed more than $50 million, while Stripe, Paxos, Moonpay and Avenia Pay processed millions more. These networks will continue to experience higher volumes in the near term, which will benefit Polygon.
Increasing growth along with strong market share in the prediction market has led to a surge in network fees. Data compiled by Nansen shows network charges have jumped by double digits over the past few months, and burn rates have also surged.
Polygon price technical analysis
A look at the daily timeframe chart shows that POL prices have fallen sharply over the past few weeks, moving from a January high of $0.1853 to a low of $0.0841 last week. This decline coincided with a broader cryptocurrency market crash.
POL price formed a double bottom pattern with a neckline of $0.1853. A double bottom is one of the most common bullish reversal signals in technical analysis.
Therefore, the POL price prediction is most likely bullish and the initial target is $0.1500, approximately 57% above current levels. A break below the key support level at $0.0845 would invalidate the bullish outlook and lead to more downside.