Polygon (MATIC) on the Road to Recovery?

Polygon (MATIC) on the Road to Recovery?

So far, in May 2023, MATIC – the native token of the Polygon network – has lost about 10% of its value. This is in addition to its unexpected descent below $1 on May 8.

Due to its recent volatility, the price of MATIC stands at $0.86 as of the time of writing, according to CoinMarketCap. It is -1.59% lower as of the last 24 hours of trading, and its overall market capitalization has fallen below the $8 billion mark. 

Although a bearish trend still plagues the market, on-chain data reveals some signals of a possible bullish reversal for MATIC.

Why MATIC can bounce back

These three on-chain signals could herald a $1 price return for MATIC.

Increase in the number of active users. 

On May 10, Polygon co-founder Sandeep Nailwal insinuated via a tweet about an upcoming MATIC airdrop. He referenced the Polygon zkEVM ecosystem and claimed that there could be additions to it (Chainlink, UX improvements, etc.)

Since then, zkEVM transactions have surged to an all-time high of 17,897 on May 21, 2023. Also, the number of active users interacting on the network has been a massive increase.

Between May 10 and May 22, the Active Addresses (7d) went from 1.21 million to 1.47 million – an increase of 22%, as shown below.

Polygon (MATIC) Price Prediction for May – Daily Active Addresses | Source:<a href='https://embed.santiment.net/chart?ps=p-matic-network&pt=MATIC&df=2023-05-03T00%3A00%3A00.000Z&emcg=1&wm=active_addresses_7d%3Bprice_usd&wax=0%3B1&wc=%23FF5B5B%3B%2326C953&ws=%7B%22interval%22%3A%221d%22%7D%3B%7B%22interval%22%3A%221d%22%7D' target='_blank' rel='noreferrer noopener'> Santiment</a>
Polygon (MATIC) Price Prediction for May – Daily Active Addresses | Source: Santiment

For context's sake, the Active Addresses (7d) metric computes a seven-day average of the unique wallet addresses interacting on a network. An appearance of an increase during a price downtrend (as shown above) signals an imminent price recovery.

Addition of new MATIC addresses

The Polygon network is experiencing a massive upturn in popularity. As a result, the daily creation of new addresses on the network has surged to astronomical levels. 

As reported by the reputable crypto analyst on Twitter, Ali, an average of about 566 new MATIC addresses have been added to the Polygon network. This impressive uptick in the daily creation of new addresses has seen the network experience a level not witnessed since February 2021. 

Polygon (MATIC) Number of New Addresses | Source: <a href='https://studio.glassnode.com/metrics?a=MATIC&category=&m=distribution.SupplyContracts&s=1682402716&u=1684627200&zoom='>Glassnode</a>
Polygon (MATIC) Number of New Addresses | Source: Glassnode

Investors Staking more MATIC

On May 15, after a significant reduction in the early part of the month, Polygon investors began increasing their staking actions again. Future profits from the imminent airdrop have been touted as a reason for this.

Within seven days, May 15 and May 22, 37 million MATIC tokens have been staked across numerous DeFi smart contracts.

Polygon (MATIC) Price Prediction for May – Supply in Smart Contracts. Source: <a href='https://studio.glassnode.com/metrics?a=MATIC&category=&m=distribution.SupplyContracts&s=1682402716&u=1684627200&zoom=' target='_blank' rel='noreferrer noopener'>Glassnode</a>
Polygon (MATIC) Price Prediction for May – Supply in Smart Contracts. Source: Glassnode

The Supply in Smart Contracts metric monitors the percentage of a crypto's circulating supply that investors have locked up in several DeFi protocols. 

On the increase in the supply  – due to staking – there is a brief plunge in market supply. A continuous staking level would increase MATIC's price as supply reduces per demand.

By and large, these bullish on-chain signals indicate that MATIC could regain the $1 price soon. However, it could be a different story if the whales decide to sell.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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