Polygon Coin Insights from Fundstrat which is an independent research company specializing in professional analysis of cryptocurrency. Polygon ($MATIC) is the token of the Polygon network. As Polygon progresses on its scaling technology, I believe it represents a diversified bet on Layer 2 solutions.
Scaling Ethereum on Multiple Technololgies
Aiming to create “Ethereum’s internet of blockchains”, Polygon is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. It strives to achieve this via the Polygon SDK, a modular and flexible framework that supports building multiple types of Dapps. This framework allows developers to launch their own custom Ethereum-compatible blockchain in a single click. The project was originally known as Matic Network, but was later rebranded to Polygon as the scope of the project expanded. While Matic was a layer-2 scaling solution for Ethereum, Polygon has become the infrastructure for a network of scaling and interconnected blockchains.
Polygon remains in a near-term stabilization effort as part of an ongoing two-month downtrend from late December 2021. Recent bounce attempts from 2/24/22 have been encouraging, though insufficient to suggest a larger low is in place. The ability to rally back over $1.70 would change this structure to a more intermediate-term bullish stance, allowing for a push up to $1.83, then $2.09. Momentum indicators like MACD have turned positive on daily charts, though remain negatively sloped on a weekly basis, so more evidence of strength will be necessary before thinking gains back to new highs have begun. Overall, the risk/reward looks attractive for buying dips barring a move back under 1.245, which would postpone the rally allowing for a bit more consolidation. On an intermediate-term basis, regaining $2.09 helps to shift focus back to late December 2021 highs at $2.92 which for now is premature.
For the past 6 months, alternate Layer 1s such as Avalanche, Solana, and Luna have garnered significant interest given Ethereum’s high gas fees, especially amongst retail traders with smaller balance sheets. As Layer 2 technology becomes developed and capital flows back into the Ethereum ecosystem, however, Polygon stands to benefit from this shift in liquidity as it is building the infrastructure using these technologies to help developers configure their own custom blockchain. Because Polygon features support for a variety of different scaling mechanisms (STARK-based zk Rollups, Plonky2-speed zk Rollups, SNARK-based zk Rollups), it is well-positioned if any single scaling solution becomes dominant in the future.
~ Fundstrat 3/7/2022
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