MATIC climbs back to $1: Is it the Inscriptions effect?

• MATIC reclaimed the psychologically important $1 mark after a gap of eight months.
• The OI in MATIC Futures lifted to an all-time high of $341 million.

Polygon [MATIC] was one of the biggest gainers in the crypto market in the last 24 hours, bouncing by nearly 20%, according to CoinMarketCap. With this, MATIC reclaimed the psychologically important $1 mark after a gap of eight months.

MATIC up in demand

The rally attracted traders in bulk, who pushed the daily trading volume to the highest levels in more than a year.

On the 27th of December, MATIC worth over $2 billion was settled across platforms, according to AMBCrypto’s analysis of Santiment’s data.

Source: Santiment

Prominent technical analyst Ali Martinez took to social platform X (formerly Twitter) to assess MATIC’s upside potential. According to him, the likelihood of Polygon’s native token moving to $1.73 would hinge on a weekly close above $0.96.

As of this writing, MATIC was exchanging hands at $1.05.

MATIC’s impressive performance in the spot market attracted the attention of derivatives traders. As per AMBCrypto’s examination of Coinglass’ data, the Open Interest (OI) in MATIC Futures lifted to an all-time high of $341 million.

Source: Coinglass

However, in a spot of surprise, the number of bearish short bets taken for the coin exceeded bullish longs over the last few days.

Source: Coinglass

Polygon comes into prominence due to…

Polygon’s network activity also rose in the last 10 days or so. Using Santiment’s data, AMBCrypto observed an average of over 250,000 daily active addresses since the 17th of December.

For much of the fourth quarter, the average count hovered around 200,000 active addresses per day.

Source: Santiment

However, the most fascinating aspect was the parabolic jump in on-chain transactions. At least, a million transactions have been settled on the network since the 18th of December.

Read Polygon’s [MATIC] Price Prediction 2023-24

Like other blockchains, the spurt was driven by heavy demand for inscriptions. According to a Dune dashboard scanned by AMBCrypto, about 17% of all transactions on the network in the past week were tied to Inscriptions-related activity.

A relatively new craze in the blockchain market, Inscriptions work by embedding images or other data directly on the chain. They have been widely used in creating unique digital assets like non-fungible tokens (NFTs).