Layer 2 scaling solution Polygon has maintained strong network activity even as the broader cryptocurrency market and its native token, MATIC, experienced a downturn in the second quarter of 2024, according to a new report from market intelligence platform Messari. Polygon Weathers Crypto Market Downturn While MATIC saw a 44.3% drop in its circulating market cap to $5.5 billion over the quarter, placing it as the 20th largest crypto asset (currently at the 26th position), the protocol’s on-chain metrics remained strong. This is in contrast to larger cryptocurrencies such as Bitcoin and Ethereum, which saw their market capitalization decline by 12% and 6%, respectively, over the same period. Related Reading: Why Is ETH Price Struggling Despite The Spot Ethereum ETFs Launch? The key driver behind Polygon’s stability in network performance during the second quarter of the year, according to Messari, was the implementation of Ethereum Improvement Proposal (EIP) 4844 on the Polygon mainnet in Q1 2024. This upgrade, which introduced “blobs” to the network, significantly reduced the average transaction fee on Polygon from $0.017 to just $0.01, resulting in a decrease of 41.1%. As a result, Polygon’s revenue derived from network transaction fees fell 40.6% to $4 million in Q2 2024. However, this drop was not due to a decrease in user activity, but rather the lower fees enabled by EIP-4844. In fact, Polygon’s user metrics continued to soar, with the protocol seeing strong growth across several key indicators. On-Chain Activity And Ecosystem Growth According to the report, the average number of daily active addresses climbed to 1.2 million, a 47.6% increase quarter-over-quarter (QoQ). The average number of daily returning addresses rose even more, up 50.5% to 1 million. Moreover, new addresses being added to the network grew by 31.7% to 167,800 per day on average. The report also notes that Polygon’s transaction volume also held steady, averaging 4.1 million daily transactions, just below its all-time high and representing a 3.9% increase from the prior quarter. In comparison, fellow Layer 2 networks Arbitrum (ARB) and Base saw average daily active addresses of 545,000 and 528,000 respectively. Related Reading: Crypto AI Token RENDER Soars 15.6% After Rebrand, Can It Hit $10? While Polygon’s decentralized finance (DeFi) total value locked (TVL) dropped 22.9% to $1 billion, this was largely attributable to the decline in MATIC’s price rather than a net outflow of capital. Messari reported that TVL denominated in MATIC actually increased by 38.1% to 1.8 billion tokens. However, DeFi protocols on Polygon saw mixed results, with Aave, Uniswap, and SushiSwap all experiencing declines in TVL ranging from 13% to 25%. Quickswap saw the largest drop at 35%. Lastly, Polygon’s non-fungible token (NFT) market also remained stable, with average daily NFT volume dipping slightly by 5.7% to $1.8 million. However, the number of daily NFT sales actually increased by 1.8% to 52,000, underscoring ongoing collector interest. At the time of writing, MATIC has experienced a mere 5% increase to a trading price of $0.512, after hitting a 2-year low of $0.428 on July 5th. Coupled with this worrying price action, the token has seen a 30% decrease in trading volume over the past few days, amounting to $197 million, according to CoinGecko data. All of this has resulted in an 82% difference to MATIC’s all-time high of $2.91, which was set during the 2021 bull run. Featured image from Shutterstock, chart from TradingView.com
MATIC, the native token of the Polygon network, has witnessed a significant decline in its value. It has fallen by more than 10% in the past week and 8% in less than 24 hours as the general cryptocurrency market continues to grapple with a cloud of negative sentiment. Fortunately, the latest on-chain analysis has revealed the important levels that investors should look out for following the latest decline in the MATIC price. Over 10,900 Addresses Bought 600 Million Polygon Tokens At This Price According to a recent post on X by crypto pundit Ali Martinez, the price of MATIC has established a key support around its current price point. This evaluation is based on analytics firm IntoTheBlock’s on-chain data, which tracks the average acquisition price for any given wallet address. The distribution of the Polygon token supply across various price ranges | Source: Ali_charts/X Above is the chart highlighted by Martinez that shows the distribution of the Polygon token supply across various price ranges. The size of the dots in the chart represents the magnitude of coins purchased around the corresponding price range. Related Reading: Post-Halving Pressure: Marathon Digital Anticipates Bitcoin Break-Even Price Of $43,000 Most notably, over 10,900 wallet addresses bought a whopping 608 million MATIC around the $1.02 and $1.05 zone. According to the crypto analyst, this massive buying activity has supported the establishment of crucial support around this price region. #Polygon has found crucial support between $1.02 and $1.05, supported by 10,900 addresses holding around 608 million #MATIC. Should this support falter, the next essential demand zone lies near $0.91, where 35,700 addresses collectively hold 394.6 million $MATIC. pic.twitter.com/rLn4ymcQf7 — Ali (@ali_charts) March 16, 2024 While the large size of the dot reflects the strength of this particular level, sustained bearish pressure could cause the price of MATIC to breach and fall beneath this support. In this case, investors could see the cryptocurrency drop to around $0.91. This makes the $0.89 and $0.92 price range another level to watch, as it represents the next vital support area, where 35,680 wallet addresses purchased nearly 400 million Polygon tokens. MATIC Price Overview As of this writing, the price of MATIC stands at $1.04, reflecting an 8% decline in the past 24 hours. This price dip comes after the altcoin printed a multi-month high of $1.28 on Thursday, March 14. According to data from CoinGecko, the Polygon coin has suffered a 9.7% price slump in the last seven days. From a broader perspective, though, the cryptocurrency has had a fairly positive performance in the past month. Related Reading: XRP Records Massive 80% Surge In Trading Volume – Can Price Reach A New ATH? With a market capitalization of more than $9.7 billion, the MATIC token ranks as the 18th-largest cryptocurrency in the sector. MATIC price finds support around $1.04 on the daily timeframe | Source: MATICUSDT chart on TradingView Featured image from Getty Images, chart from TradingView