Ethereum Layer-2 scalability solution Polygon (MATIC) saw its fair share of ups and downs since its inception, with the most notable being the Q2 drop, which tumbled down the coin to a yearly low of just $0.3228 per MATIC. In contrast, just six months prior to the low, MATIC recorded its greatest point in terms of value - $2.92 per coin.
However, MATIC saw its price increase since the low, reaching a current price point of $0.9172 per coin.
What drives MATIC prices up and down?
The latest price increase is due to the launch of Polygon’s latest Bridge for Gnosis Safe. As with other networks, it is normal for a coin to record a price hike after an important update. The latest update enabled Ethereum users to move their Safe assets between Polygon and Ethereum, making the asset transfer process simpler, cheaper, and faster.
“The integration enables users to enjoy the benefits of Safe’s multisig technology without sacrificing security, cost, and convenience. This means Web3 teams, like DeFi protocols and DAOs, can repurpose their Safe assets without spending an arm and a leg on gas.” Polygon wrote in a blog post.
The news quickly shifted interest towards MATIC with the fourteenth-largest crypto project to date increased both in price and in trading volumes, which is usually considered as a bullish indicator. The latest push increased the market capitalization of the Layer-2 solution to around $7.4 billion.
However, MATIC’s price may as well go down, as despite the increase in both price and trading volumes the daily active addresses on the network have decreased, meaning fewer users are making transactions on the network.
There is a ray of hope, though, as another metric suggests that the non-zero balance active addresses actually increased, meaning a healthier and more active ecosystem.
Will MATIC return to its former price tag?
MATIC’s price performance in the first half of 2022 is without a doubt stressful for MATIC holders, as the coin took a nose dive from $2,58 all the way down to its June low of $0.32. However, the fall was in stages, with consolidation pauses between episodes. Interestingly, since July 13, MATIC is steadily adding to its value, even while trading volumes are low. This indicates that the bearish season may be close to an end.
However, MATIC seems to follow suit with the rest of the crypto sector, since its gains and losses can be closely projected on top of the price movements of cryptos like Bitcoin and Ethereum. The steady price increase, for example, is more or less market-wide, rather than an isolated event. Furthermore, Ethereum’s transition to Proof-of-Stake (PoS) consensus algorithm may render the scalability part of Polygon useless.
Nevertheless, MATIC is close to surpassing $1, which can also give it a pronounced boost if the market conditions remain optimistic.