Polygon: What high network activity means for MATIC
- Despite a hike in active addresses, Polygon’s daily transactions dropped.
- MATIC was down by 13%, and a few metrics looked bearish.
As we conclude the first week of 2024, Polygon’s [MATIC] network activity has gained upward momentum. The achievement reflects a rise in adoption and usage in the recent days.
While that happened, the crypto market turned bearish, which caused MATIC’s price to plummet substantially.
Polygon’s network activity on the rise?
Sandeep Nailwal, co-founder of Polygon, recently posted a tweet highlighting the blockchain’s achievements.
As per the tweet, Polygon PoS recorded the highest number of daily active addresses during the first week of 2024 since October 2023, averaging 500 thousand per day.
NEW: Polygon PoS records highest amount of daily active addresses since October.
Now averaging 500K per day. https://t.co/HSMnkt6Ls1
— Sandeep Nailwal | sandeep. polygon 💜 (@sandeepnailwal) January 4, 2024
Since this clearly suggested a rise in Polygon’s demand and adoption, AMBCrypto took a closer look at the blockchain’s network health. Our analysis of Artemis’ data found that MATIC’s daily active addresses were actually increasing for several weeks.
Additionally, as per Polygonscan’s data, the blockchain’s daily gas usage chart also remained stable throughout the last month.
However, it was surprising to note that despite the hike in active addresses, Polygon’s number of daily transactions has somewhat declined in the recent past.
Things in terms of captured value also did not look good for MATIC, as several of the ley metrics dropped.
For example, after a comfortable rise, Polygon’s TVL dropped. Not only that, but the generated fees and revenue also registered a decline, which looked concerning.
MATIC bears are putting pressure on investors
Amidst this, MATIC’s price action turned bearish, which can be attributed to the broader market contention, causing most cryptos to shed their values.
According to CoinMarketCap, in the last seven days alone, MATIC was down by more than 13%. At the time of writing, it was trading at $0.8323 with a market capitalization of over $7.9 billion.
To see what caused this downtrend, AMBCrypto checked MATIC’s liquidation heatmap. Our analysis found that sell pressure on Polygon surged substantially when its value touched the $1.03 mark, initiating a price downtrend.
A similar hike in liquidation was also noted near the $0.89 mark, which further pushed the token’s price down.
As per CryptoQuant, MATIC was still reeling under sell pressure as its net deposits on exchanges were high compared to the last seven-day average. Thanks to the price decline, MATIC’s MVRV ratio plummeted sharply.
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However, its network growth remained high, meaning that more new addresses were created to transfer the token.
Additionally, whales’ confidence in MATIC was also high, as evident from the slight rise in its supply held by top addresses.