- Polygon has faced numerous headwinds recently as competition rose.
- The DeFi TVL in Polygon has dropped to ~$1 billion.
- Polygon will have a major hard fork on Friday this week.
Polygon MATIC price came under intense pressure this week as demand for cryptocurrencies dropped. The token recoiled to a low of $0.50 as Bitcoin crashed to $26,500. This happened as the US dollar index (DXY) retreated and stock indices rose for four straight days.
Polygon hard fork ahead
Polygon is a leading player in the blockchain industry, where it pioneered the layer 2 technology. The Indian company raised millions of dollars from venture capital firms and gained wider adoption by developers.
Along the way, Polygon created additional solutions in its ecosystem. Some of these new products are Polygon zkEVM, Polygon Miden, Polygon ID, and Polygon CDK among others. Its goal has always been to make the industry better by bringing higher speeds and low transaction costs.
Polygon has faced numerous challenges in the past few months. Unlike in the crypto bull run in 2021, activity in the industry has dropped recently. For example, the total value locked (TVL) in its DeFi protocol slipped to $1 billion. At its peak, it had a TVL of over $6 billion.
Also, some of Polygon’s key corporate partners like Meta Platforms and Disney largely abandoned their crypto projects.
Polygon has also seen competition in the layer-2 ecosystem rise. The biggest competitors are other platforms like Arbitrum and Optimism that have gained huge following. Optimism powers Coinbase’s Base and WorldCoin.
Internally, Polygon has also faced some challenges as some leading executives have left the company.
Meanwhile, the developers announced a new vision of Polygon 2.0 in June. As part of this transition, MATIC will transition to POL. POL will become the native gas and staking token for the ecosystem. It will also launch the staking feature.
As part of this transition, Polygon will go through the Aalborg hardfork on Friday this week. This fork will happen a few weeks after the developers launched the fork in Mumbai testnet. In a statement, Binance said it would support the hard fork.
Polygon price forecast
The daily chart shows that the MATIC price has been in a consolidation phase in the past few weeks. It has remained between the support at $0.5200 and $0.600. Polygon is also consolidating at the 25-day and 50-day moving average while the Relative Strength Index (RSI) has moved below the neutral point.
Polygon’s volume has also been quite limited. Therefore, I suspect that the token will continue consolidating in the coming days though the hard fork could lead to more volatility.
