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Despite the recent surge in on-chain activity, MATIC price performance has been dismal.
Polygon’s native token MATIC could be setting up for a significant turnaround following a recent spike in on-chain activity.
Analysts have noted a rise in both active addresses and movement of dormant coins, which may indicate a potential reversal in the token’s current downtrend.
Recent On-Chain Activity Surge
On August 28, blockchain analytics firm Santiment reported a substantial increase in Polygon’s on-chain activity. The platform observed a notable rise in the movement of dormant MATIC tokens, along with an uptick in the number of active addresses interacting with the network. This surge is the second highest of the year, suggesting that MATIC may be on the verge of a reversal.
📊 Polygon has been among the many networks declining since crypto's retrace began back in March. However, a notable spike in on-chain activity may be a sign that a MATIC reversal may be brewing soon. Active addresses and dormant coin spikes are common signals preceding this. pic.twitter.com/RY5NXe10ZW
— Santiment (@santimentfeed) August 28, 2024
This increase in on-chain activity contrasts with the recent downtrend. Data from Polygonscan shows a sharp drop in address activity, falling from 1.6 million in late July to around 70,000 by late August, a decrease of nearly 50%. Daily transactions have also declined from over 5 million in March to about 3 million by late August.
Market Performance and Recent Trends
Despite the recent surge in on-chain activity, MATIC price performance has been dismal. The token briefly reached a two-month high of $0.58 on August 25 but was unable to sustain this momentum. As of August 29, MATIC has dropped 24% to a 10-day low of $0.437. This price decline is significant, considering MATIC is still down approximately 85% from its all-time high of $2.92 recorded in December 2021.
The broader crypto market has also been experiencing a downturn, impacting MATIC’s performance. Major cryptocurrencies like Bitcoin and Ethereum have faced declines, contributing to the overall market weakness.
Potential for Reversal
The spike in on-chain activity could signal a potential reversal for MATIC. Santiment’s Age Consumed metric, which tracks the movement of long-held tokens, has shown an increase, indicating that dormant tokens are being reactivated. Historically, such increases have been associated with price changes for the token.
In addition, Polygon is preparing for a network upgrade. Binance recently announced its support for the migration from MATIC to POL, scheduled for September 4. This upgrade aims to enhance the token’s functionality and could positively impact its market performance.
Challenges and Future Outlook
Adding to Polygon’s troubles, the network’s Discord channel was compromised on August 24. The attack, part of a larger security breach affecting several blockchain projects, involved unauthorized access to Polygon’s Discord servers. The breach raised concerns about the security of communication channels within the Polygon community and potentially undermined investor confidence.
Despite these hurdles, the increased on-chain activity and the upcoming token migration provide some optimism. How MATIC responds to current price levels and market conditions will be crucial in determining whether a sustained recovery is possible. Investors will need to keep a close watch on these developments to assess MATIC’s potential for recovery.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
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Leon is a seasoned blockchain writer and reporter, dedicated to uncovering the stories behind decentralized technologies. He excels in providing in-depth analysis and thought leadership in blockchain media. His reporting sparks meaningful conversations and fosters a deeper understanding of the transformative potential of blockchain.
