Aug 19, 2024
6thTrade
On September 4, Ethereum's largest scaling solution, Polygon, reached a significant milestone with the long-awaited migration of its MATIC token to the new POL token. However, this major transition appears to have caused a ripple effect among users, leading to a noticeable drop in activity on the network. $MATIC
Transaction Activity Hits Multi-Month Low
Data from Polygonscan reveals that on the day of the migration, the total number of transactions on Polygon’s Proof-of-Stake (PoS) chain plummeted to 2.44 million. This figure marks the lowest level of activity on the Layer-2 (L2) network since December 2023.
The decline in transactions suggests that many users are opting to stay on the sidelines, likely due to uncertainty surrounding the token transition. With the migration underway, some may prefer to wait until the process is complete before resuming their usual activities on the network.
MATIC Price Struggles Amid Uncertainty
This cautious behavior among users is also reflected in MATIC’s price performance. Despite a slight 3% increase over the past 24 hours, with the altcoin trading at $0.41, the price remains muted. This subdued movement is particularly striking in light of a 27% surge in trading volume, which reached $142 million. The market’s uncertainty around the transition to POL has likely contributed to this stagnation.
Resilience in Polygon’s DeFi Sector
Despite the overall slowdown in network activity, Polygon’s decentralized finance (DeFi) sector has shown signs of resilience. On the same day, the network’s total value locked (TVL) saw a 5% increase, reaching $859 million, according to data from Artemis. Additionally, trading volume on decentralized exchanges (DEXes) within the Polygon ecosystem surged by 21%, with daily volumes hitting $69 million.
These figures indicate that while overall transaction activity has dipped, interest in DeFi on Polygon remains robust, suggesting a continued faith in the network’s potential.
MATIC’s Price Outlook: Signs of Recovery?
Although MATIC has yet to experience a significant price rally following Polygon’s announcement, there are emerging signs of renewed buying interest. On the 12-hour chart, MATIC’s Relative Strength Index (RSI) is trending upward and appears poised to cross above the 50-neutral line—a move that could signal a shift from bearish to neutral or even slightly bullish momentum.
Should this buying pressure continue to build, MATIC’s price could climb to a 30-day high of $0.55. However, if the market sentiment turns negative, the token could face a decline to $0.33.
Technical Indicators Point to Potential Upside
From a technical perspective, MATIC is showing positive signs. The price has started to rise from the $0.3920 zone and is now trading above $0.4120 and the 100-hour simple moving average. There’s also a key rising channel forming, with support at $0.4125 on the hourly chart.
Immediate resistance lies near the $0.4220 and $0.4250 levels. If MATIC manages to break through these barriers, it could gain the momentum needed to reach higher levels, with the next major resistance around $0.4450. A clear move above this level could set the stage for a steady increase, possibly targeting the $0.4620 or even the $0.4800 mark.
Potential Risks: Another Dip?
However, if MATIC fails to overcome the $0.4220 resistance, it could face another downturn. Immediate support is at the $0.4150 level, with more substantial support near $0.4120. A drop below these levels could open the door for a decline toward $0.40, with the next major support around $0.3920.
As Polygon navigates this critical period of transition, all eyes will be on MATIC’s performance in the coming days. Whether the token can overcome its current challenges and capitalize on its recent momentum remains to be seen.
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