- MATIC price drifted upwards on Tuesday as cryptocurrencies jumped.
- Polygon is facing numerous challenges as competition from Optimism and Arbitrum rises.
Polygon (MATIC) price bounced back modestly on Tuesday even as the network continued facing numerous challenges. The platform is battling rising competition in the layer-2 scaling industry and increased defections from some of its key dApps. MATIC jumped to a high of $1.1681, the highest point since March 20th.
Increased competition
Polygon, the premier player in the layer-2 industry, is facing significant challenges. The most important one is the fact that the network is not the only game in town. Instead, the layer-2 and zk-scaling ecosystem has gotten more competitive in the past few months.
The biggest competition is coming from Arbitrum, which I wrote about here. Arbitrum has continued to gain market share across all industries, including DeFi and non-fungible tokens (NFT). For example, in the DeFi industry, Arbitrum has attracted some of the biggest players like GMX, AAVE, and Balancer.
As a result, Arbitrum has seen the total value locked (TVL) of its DeFi platform jump to over $1.3 billion. This makes it the 4th biggest chain in the industry after Ethereum, Tron, and BNB Chain. There is a likelihood that Arbitrum will gain more market share as it transitions into DAO. It will airdrop the ARB token on Thursday.
Read more: How to invest in Polygon.
Polygon is also facing competition from Optimism, a leading layer-2 scaling platform. Like Arbitrum, Optimism has attracted popular players in the industry like AAVE, Uniswap, Beefy, and Stargate Finance. It now has a TVL of more than $995 million. Coinbase recently launched Mantle, which is built on Optimism.
Polygon is also facing other challenges as well. For example, Meta Platforms recently said that it was ending its NFT project. That was notable since Meta had selected Polygon and Flow for its NFT project.
And this week, Render Network members are voting to leave Polygon for Solana. The proposal said:
“The decision whether to continue with Polygon versus moving to Solana sparked a spirited debate between the pros and cons of each, with support for Solana’s runtime, developer community, low transaction fees, and speed contrasting Polygon’s centralization, reorg tendency, and user experience concerns.”
Polygon price prediction
The 4H chart shows that the MATIC price crawled back after hitting the key support point at $1.0792. It is hovering at the 25-period and 50-period moving averages. A closer look shows that the coin has formed what looks like a double-top pattern at $1.2484.
In price action analysis, this pattern is usually a bearish sign. Therefore, there is a possibility that Polygon price will soon have a bearish breakout. This view will be confirmed if the token moves below the key level at $1.0792. The stop-loss of this trade will be at $1.2485.
