3 Possible Reasons why Investors are Stocking up on MATIC

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The bear market seems to have taken a stop over the last couple of weeks. Crypto prices reached their bottom and are currently consolidating around their respective support areas. For Polygon specifically, prices managed to rebound higher in an attempt to break out of this consolidation higher. Why are investors suddenly interested in MATIC? Why is MATIC a good investment? In this article, we analyze MATIC prices and lay out 3 possible reasons why investors are stocking up on MATIC.

What is the Polygon blockchain?

Polygon is a layer 2 solution that uses a second level and several sidechains to unload the Ethereum blockchain. The so-called “plasma chains” of Polygon are particularly important. The smart contracts are removed from the Ethereum network using these Ethereum sidechains. Developers of decentralized apps and smart contracts may use the Polygon network to outsource their work if necessary. This is a solution to Ethereum’s scalability problems.

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MATIC prices crashed hard in 2022, what happened?

In November 2021, most cryptocurrencies have reached their all-time high prices. For MATIC specifically, that price was around $3. However, the cryptocurrency market crashed soon afterward by an average of 55%. MATIC was one of those tokens that crashed the hardest, losing more than 80% within 3 months from a high price of $3 to a low of $0.5.

MATIC/USD 4-hours chart showing the crash in MATIC prices
Fig.1 MATIC/USD 4-hours chart showing the crash in MATIC prices – GoCharting

Following this crash, a brief consolidation occurred between a price of $0.56 and $0.70. This is where day traders managed to make great returns by buying around $0.56 and shorting around $0.70. Despite the short price range, traders can use leverage to increase their returns. However, using leverage in uncharted territories can definitely be risky.

MATIC/USD 2-hours chart showing the consolidation on MATIC
Fig.2 MATIC/USD 2-hours chart showing the consolidation on MATIC – GoCharting
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MATIC Price Prediction – Will MATIC reach 1 $ soon?

There are many variables that come into play for MATIC to reach a price of 1 $ again. Despite its huge use case in the crypto industry, the crypto market is still trying to recover. Additionally, Bitcoin still has a significant dominance over the crypto market. If MATIC was to recover, the entire market including Bitcoins needs to show a sign of a recovery.

From a technical perspective specific to MATIC, prices need to first break the resistance area of $0.70. Once that’s done, the next psychological area would be the $0.80 price mark. When those two levels are breached, we can safely assume that MATIC price is reaching 1 $.

MATIC/USD 12-hours chart showing the potential trajectory of MATIC to 1$
Fig.3 MATIC/USD 12-hours chart showing the potential trajectory of MATIC to 1$ – GoCharting

3 Reasons why Investors are Buying MATIC

Polygon as a project is a very useful one. Despite Ethereum being the biggest crypto project that provides smart-contracts, it still has big flaws: scalability and fees. Polygon easily solves those problems, hence why most projects are deploying on its blockchain. This results in more demand for its infrastructure, thus to its token MATIC. Here are 3 reasons why most investors are eyeing MATIC:

MATIC price is undervalued: MATIC is currently sitting at a price around $0.63, and its ATH from 8 months ago was around $3. The crash happened purely from a technical perspective.Polygon use case is in high demand: Every crypto project that wants to use smart contracts is a bit wary of Ethereum’s high fees. Deploying on Polygon is much cheaperMATIC’s technical formation: professional traders only buy when the technical price is attractive. After the current consolidation, MATIC is in a perfect buy zone for investors who want to place clear SL areas to manage their risks.

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