As a well-known Layer 2 blockchain solution in the cryptocurrency market, Polygon's native token $MATIC is preparing for a bold transformation in the near future.

According to the official announcement of Polygon, Polygon is scheduled to upgrade the mainnet on September 4, 2024. After the upgrade, $POL will replace $MATIC and become the main token used for gas fees and staking functions in the initial stage of the network. $POL is expected to maintain the existing token economy, distribution and total supply of $MATIC.

Polygon's transformation decision is an important step towards Polygon's 2.0 roadmap. However, such a transformation is not entirely a good thing. Now that most $MATIC investors are in a loss-making state, Polygon's transformation will undoubtedly sow more seeds of uncertainty and challenges.

Why are we facing severe challenges?

Let’s first look at the most authentic on-chain data. Since April this year (2024), the situation of $MATIC has been very grim. Not only has the number of daily active addresses dropped sharply, but the overall network growth and activity have also shown a downward trend.

Specifically, from August 11 to August 12, in just one day, the number of active addresses of $MATIC dropped from 500,000 to only 88,000. The transaction volume on the Polygon chain during the same period dropped sharply from 130,000 to 17,000. The serious decline in user activity has undoubtedly cast a shadow on the future of $MATIC.

According to another data, most $MATIC investors are currently losing money. Judging from the current price of $0.4, it has fallen by more than 80% from the historical high of $2.92. Nearly 97.74% of $MATIC holders are in a loss, and only 1.49% are making a profit.

Although Polygon officially plans to transform in September, the decline in data and the loss status of holders undoubtedly make the prospects of $POL after the transformation of $MATIC not optimistic.

Does technical analysis suggest a reversal?

However, despite the poor market conditions of $MATIC, from the chart, the price of $MATIC is forming an ascending triangle. If MATIC can successfully break through the minor resistance level of $0.4348, it may theoretically lead to a market rebound.

At the same time, the current relative strength index (RSI) of $MATIC is at 49.14, which is in the neutral range, which means that $MATIC is neither overbought nor oversold. The current support level is at 0.4. If this level is broken again, there may be a new low, which can be used as a stop loss level.

Polygon's transformation is undoubtedly a "big bet" for the future. The purpose of changing $MATIC to $POL is to enhance the practicality and security of the Polygon native network through Polygon 2.0, thereby creating incentives to attract investors and developers. However, if Polygon wants to succeed after the transformation, it still has a long way to go.

Either you provide tangible benefits to users and make the chain active, or you can only wait for the arrival of big bulls to push up the price.

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