The Layer-2 scaling solution for Ethereum, Polygon (MATIC), is currently going through a strange circumstance. The quantity of network activity has increased significantly, but the cryptocurrency’s price is still unpredictable. It’s stuck in a rut, held back by both a possible technical breakthrough and a chronically pessimistic outlook.
Polygon: Can Active Addresses Raise The Bar?
Polygon’s network was humming on July 8th, with an astounding 1.18 million active addresses. For the same period, this easily outpaced Ethereum (365K) and Bitcoin (594K). The increase in user activity stoked expectations of a positive breakout, especially as MATIC was trading over a crucial $0.50 barrier level.
Co-founder of Polygon Mihailo Bjelic excitedly provided this statistics, emphasising the increasing use of the network. Some cryptocurrency fans, meanwhile, were quick to label this as a “vanity metric.” They contended that robust economic fundamentals or important transactions are not always correlated with raw address count.
Number of active addresses (24h):
Polygon: 1.18M
Bitcoin: 594k
Ethereum: 365kNot too shabby, I guess..
— Mihailo Bjelic (@MihailoBjelic) July 8, 2024
Although resistance lingers, the falling wedge pattern suggests a breakout.
Taking into consideration the technological aspects, it seems that things are getting better for MATIC. As the token has been moving in a falling wedge formation, which is commonly seen as a sign that an upswing in the market is about to occur, the pattern has been observed. In addition, as a result of a recent spike in price, MATIC came dangerously close to crossing the threshold of $0.50 for a brief while. It is probable that this is an indication of a future breakout, particularly if the volume of trade grows.
MATIC market cap at nearly $5 billion today. Chart: TradingView.comBut the bulls are up against an unyielding obstacle. As the mark has shown to be a strong resistance level in the past, a clear break above it is essential to the validation of the falling wedge breakout. Moreover, the general mood of the market is still biassed towards the bears. At the time of writing, MATIC was down 10% in the weekly timeframe, data from Coingecko show.
Bullish Binance, But Can They Move The Market?
Meanwhile, the biggest cryptocurrency exchange in the world, Binance offers some optimism. When it comes to MATIC, Binance, users seem to be far more optimistic than the whole market. With a solid long to short position ratio of 3.2052, they appear to have a high conviction in the potential of MATIC going forward.
It’s encouraging to see such strong enthusiasm on a significant exchange. But it’s not clear if it will be sufficient to counter the general pessimism. For MATIC, the next several days will be critical. A falling wedge breakthrough might occur if it can generate enough volume to break over the $0.50 barrier and maintain the momentum. But if the barrier holds and the bearish attitude persists, MATIC can experience more downside pressure.
Featured image from cryptodnes.bg, chart from TradingView