Why Polygon’s MATIC is up over 60% this week

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A number of top cryptos have seen gains this week, but none have exploded as much as Polygon (MATIC). MATIC is up over 60% in the past seven days, according to data from CoinMarketCap. In comparison, Bitcoin (BTC) gained 9% and Ethereum (ETH) is up almost 30%.

Before we dive into the reasons behind Polygon’s price spike, let’s quickly recap what Polygon does. Polygon is an aggregator of layer 2 solutions. Layer 2 cryptos rely on existing blockchains – in the case of Polygon, Ethereum — to improve performance. As Ethereum continues to struggle with high fees and network congestion, Polygon has an important role to play.

Polygon’s price spike

There are a few factors that drive up the price of Polygon. Most important is the news that he has been selected for Disney’s accelerator program. Another is that the market as a whole recorded gains, with the total crypto market cap hitting the $1 trillion mark for the first time since mid-June.

1. The Disney Accelerator Program

Polygon was one of six companies chosen by Disney to join its 2022 Acceleration Program. This year, Disney focused on augmented reality, non-fungible tokens (NFT), and artificial intelligence. A press release says the program aims to accelerate the growth of innovative companies. Polygon is the only blockchain to be selected for the program.

2. Continuous growth of the ecosystem

Polygon is one of many blockchains that has attracted projects from the now defunct Terra Network. Polygon Studios has earmarked millions of dollars to help projects relocate to its ecosystem. As a result, according to DeFi Llama, it now has 275 protocols on its network and the total cash deposited on the network has increased by more than 10% in the past week.

Polygon has also made great strides in terms of adoption. In May, Meta named Polygon as one of its NFT partners. Coca-Cola also used Polygon to launch a series of NFTs that celebrate Pride this month. Additionally, Polygon is counting down on its social media feeds to a big announcement, due in a few days. Watch this space for more news.

What this means for investors

It’s great to see solid crypto projects like Polygon post gains, and some analysts are tentatively talking about a rally. But it’s very early. Inflation is still high and many economists warn of potential recession. There is a good chance that we will see another big hike in interest rates when the Federal Reserve meets at the end of this month. We also don’t know what impact increased regulation will have on the crypto industry.

Polygon is still down nearly 70% from its all-time high, even after its recent price gains. Some investors may see this as a buying opportunity. But keep in mind that it is often risky to buy cryptocurrency just after a big rally. The risk is greater if you buy simply because the price has risen and you hope it will gain more in the short term. Unfortunately, the crypto market is often fueled by speculation, and dramatic gains in crypto often precede a price drop, even in a bull market.

A better approach is to look at how well you think Polygon might perform in the next five to 10 years. Look at his leadership, his track record and how he stacks up against the competition. The future of Polygon is closely tied to that of Ethereum, which is being upgraded on a massive scale. It is worth studying how MATIC will behave once Ethereum completes its upgrade, which is expected to take place next year.

At the end of the line

Polygon has made a series of exciting announcements over the past few weeks and months, and it looks like there will be more to come. However, don’t buy any asset just because its price has gone up. Look at the fundamentals and how you think it will work long term. Not only can cryptocurrencies be extremely volatile, but it can be difficult to sustain short-term gains in the face of broader economic and regulatory headwinds.

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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts.Emma Newbery has positions in Bitcoin, Ethereum and Polygon. The Motley Fool has positions and recommends Bitcoin, Ethereum and Polygon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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