Assessing Polygon’s lack of momentum and why it isn’t completely at fault

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Besides Bit­coin and Ethereum, every cryp­to-asset in the mar­ket has under­gone con­sis­tent shuf­fling over the course of 2021. The mar­ket cap val­ue between some of the top projects has been neck and neck. The dif­fer­ence between Car­dano, XRP, and Polka­dot, for instance, is only $5 bil­lion from one to anoth­er, and that has been the sto­ry for most of the year.

How­ev­er, one project which has sig­nif­i­cant­ly slid down the rank­ings since Q2 of 2021 is Poly­gon. It is cur­rent­ly ranked 19th on the charts, with a mar­ket cap of $13 billion.

In order to ana­lyze its bull­ish cre­den­tials, we eval­u­at­ed its on-chain data and mar­ket struc­ture to under­stand where it is at.

Polygon – What is holding MATIC back?

Source: Trad­ing View

If the dai­ly chart is observed, Poly­gon has stag­nat­ed as much as pro­claimed, while also mov­ing slow­er than oth­er projects. The likes of Bit­coin, Ethereum, Binance Coin, and Polka­dot have reg­is­tered new all-time highs since the col­lapse in May. Meme tokens such as Shi­ba Inu have also grabbed a lot of mar­ket attention.

Poly­gon, how­ev­er, is cur­rent­ly con­sol­i­dat­ing around the $1.90-mark. And, it is still 45% away from its ATH val­ue. The falling trad­ing vol­umes also seemed to sug­gest a lack of aggres­sive buy­ing pressure.

Even so, the on-chain met­rics were point­ing to a pos­si­ble buy­ing window.

Source: San­ti­ment

Accord­ing to San­ti­ment, Polygon’s active address­es have con­sis­tent­ly increased over the past cou­ple of weeks, even though the price has more or less remained the same. A bull­ish diver­gence can take place from this point and its MVRV ratio sug­gest­ed a sim­i­lar sentiment.

The MVRV dropped down to a lev­el that point­ed to a buy­ing oppor­tu­ni­ty as the mar­ket val­ue fell when com­pared to the real­ized val­ue. Irre­spec­tive of the cur­rent sit­u­a­tion, MATIC’s cre­den­tials remain actu­al­ly sol­id at the moment.

Did rising competition stifle its growth?

Source: Defilla­ma

A com­mon nar­ra­tive in 2021 has been ris­ing pro­to­cols and flashy blockchains. While a lot of them have bit the dust, the likes of Ter­ra and Avalanche may have man­aged to absorb some of Polygon’s activ­i­ty. As illus­trat­ed by the chart, both LUNA and AVAX had a high­er TVL val­ue and with respect to Mcap/TVL ratio, both these projects are actu­al­ly under­val­ued in com­par­i­son to Poly­gon. (low­er the ratio, more room for growth).

And yet, Polygon’s advan­tage comes from the fact that it is an actu­al lay­er 2 on Ethereum, and it is sup­port­ed by Ethereum devel­op­ers. Poly­gon has been in the indus­try for a longer peri­od while AVAX and LUNA are new and unproven entrants.

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