- Polygon’s MATIC price has remained in a tight range in the past few weeks.
- The network is facing substantial competition from Arbitrum, Optimism, and Base.
- Its DeFi total value locked (TVL) has remained under pressure in a while.
Polygon price has remained in a consolidation phase for a while as the crypto winter goes. After peaking at $0.8902 in July, MATIC price has plunged to $0.5500, where it has remained at in the past few days.
Polygon is facing challenges
Polygon is facing several challenges that are affecting its token price. First, the biggest issue is that the layer-2 industry is getting extremely competitive. The biggest competition is coming from other layer-2 platforms like Arbitrum and Optimism.
Other layer-2 networks have come up recently. For example, Coinbase launched Base a few months ago while Consensys has unveiled Linea. All these L2 networks seek to scale Ethereum, reduce transaction costs, and boost speeds in the network. As such, unlike in the past, Polygon is not the only game in town.
Second, Polygon price has recoiled because of the waning activity in its ecosystem. One way to look at this is the network’s DeFi total value locked (TVL), which has retreated. It now stands at 2.11 billion MATIC, lower from its all-time high of 9.6 billion MATIC.
Read more: How to buy Polygon.
A key challenge in the DeFi industry is that interest rates have surged to the highest level in more than 20 years. As such, people are finding it easier to generate yield by just moving to money market funds. That has affected lending protocols like Aave and Compound.
At the same time, the waning volumes in the crypto industry has affected DEX platforms like Quickswap, Uniswap, and PeariFi.
Finally, Polygon price has dropped because of the weakness in other industries like Non-Fungible Token (NFT) and the metaverse. At its peak, Polygon was a leading player in these Web3 industries.
Like other cryptocurrencies, MATIC price is struggling because of the Bitcoin ETF issue. The SEC decided to delay its decision on key BTC ETF proposals last week after losing a major lawsuit against Grayscale.
Polygon price forecast
The 4H chart shows that there are clear similarities between MATIC and ADA prices. Like Cardano, Polygon has found a strong support at $0.5295. This support resembles a double-bottom pattern. Polygon is also consolidating at the 25-period and 50-period moving averages.
At the same time, Polygon’s volume remains significantly low while the Relative Strength Index (RSI) has drifted upwards. Therefore, the outlook for Polygon is neutral for now. I suspect that the coin will continue consolidating in the coming days. More downside will only be confirmed if it drops below the support ay $0.5294.
