Polygon price has been in a downward trend in recent months as it continued to lose market share in the layer-2 industry.
MATIC dropped to the key support at $0.4343 on Friday and has since pared back some losses. However, it remains around 60% below its highest point this year and 82% below its all-time high.
Competition in the layer-2 industry
Polygon, a pioneer in the layer-2 industry, has faced increasing pressure in recent years as competitors have emerged.
Its total value locked (TVL) in the DeFi industry has dropped to $872 million from a record high of almost $10 billion. In MATIC terms, the TVL has decreased from a record high of 5.7 billion to 1.78 billion today.
Arbitrum, a leading layer-2 network, has attracted 661 DeFi developers, with a TVL of over $3 billion.
Polygon has also been surpassed by networks like Base and Blast, which have $1.4 billion and $1.2 billion in assets, respectively. Optimism has also taken some market share from Polygon.
These competitive pressures partially explain why the MATIC price has plunged by 82% from its all-time high.
Despite these challenges, Polygon shows some encouraging on-chain metrics. For instance, data indicate it has over 1.09 million addresses, making it the second-biggest chain after Tron, which has 2.09 million addresses.
Other positive indicators include stable daily transaction figures, remaining over 3.8 million since March 11 this year.
Additionally, stablecoin volume has shown a strong upward trend since October last year. The volume has risen from 1.17 billion MATIC to over 1.8 billion on Tuesday. Stablecoins are crucial in blockchain transactions.
Stablecoins in Polygon
Polygon also boasts a higher staking yield than most cryptocurrencies, with a yield of 5.67% compared to Ethereum’s 3.29% and Cardano’s 2.9%.
Polygon price has lost a key support
Polygon price chart
Despite its strengths, the Polygon price has sharply dropped in recent weeks. It has also fallen below an important support level, potentially invalidating a double-bottom pattern.
It fell below the key support at $0.50, which it had maintained in June and October 2023. Unless this is a false breakdown, it’s likely that Polygon will continue to fall and reach the next support at $0.3206, which was its lowest point in June 2022 and 37% below the current level.
