The year 2022 saw the value of Polygon’s native MATIC token drop by 64%. But the network started this year on a high note, with the price up 8% according to the charts. However, can MATIC maintain this momentum?
On-chain developments will play a big role for MATIC
The Layer 2 ecosystem has seen on-chain developments grow. Just before the start of the new year, Polygon’s first prediction market Finance Bhavish made multiple records which put Polygon in the spotlight. Uniswapa decentralized exchange in the ecosystem, ended 2022 with an annual volume of $28 billion.
The DEX has surprisingly accomplished this with a TVL of less than $100 million, but at the time of writing Uniswap’s TVL on Polygon is at $111.21 million, according to the public DEX dashboard.
These bullish developments, however, are preceded by big news on Polygon’s NFT arm. DeGods and y00tstwo of Solana’s biggest names, will make the bridge their collections on Polygon and Ethereum in the first quarter of 2023.
This would inevitably generate interest in Polygon’s NFT market, pushing MATIC’s price higher. However, as the deadline for the ‘Shanghai’ network upgrade of Ethereum, Polygon’s main offering, which are low gas fees thanks to a better deployment protocol, will be challenged.
With that in mind, it remains to be seen what on-chain developments might differentiate Polygon with the upgrade of Ethereum and other L2 protocols.
Crypto FUD Will Strengthen Long-Term Bears
The Crypto Market Has Definitely Suffered From Last Year big meltdowns. But the FUD (fear, uncertainty and doubt) that has arisen from these events could be reinforced as Huobi, a centralized exchange, seems to be melting in real time.
Recent news shows that the CEX will be fire 20% of its employees. Tweets about the Huobi situation show that Justin Sun, the famous ghost owner of Huobi, has been convert billions of his crypto to fiat on Binance.
MATIC total market cap at $7 billion on the daily chart | Chart: TradingView.com
We also observe that the exchange itself has increase in withdrawals over the past two days. This has led to speculation that the exchange could be the next FTX. Any negative developments here would affect Polygon, as insolvency news is hitting crypto markets particularly hard.
🟡 What could happen to Huobi?
– Huobi has outflows of $80 million (4%) in the last 24 hours and $133 million (7%) in 7 days against their own assets of $2 billion
– Could stop withdrawals and activities if the situation becomes excessive
– The thing to do right now is to step back and keep yourself
— Rock 🪨 (@DataaRocks) January 6, 2023
However, in the short to medium term, MATIC has some room for growth as the current support at $0.7538 proves to be a hurdle for the bears.
Past bullish developments in the channel are also helping investor sentiment stay positive. But with the token’s strong correlation to ETH, negative macros could pull the king of altcoins down with MATIC.
Investors and traders should aim for price resistance at $0.8106 to continue the uptrend of MATIC.
– Featured Image: The Daily Hodl