Key Takeaways:
- Polygon’s MATIC lost 10% of its valuation in the week starting Oct 8, risking another 4% slide.
- Y00ts NFT Collection and LayerZero left Polygon in Q3.
- The blockchain’s EVM-supporting layer-two solution also lagged behind competitors.
YEREVAN (CoinChapter.com) — Polygon’s token MATIC dropped nearly 10% week-to-date, reaching just above $0.5 on Oct 10. However, the bears will likely push the coin down another 4% to reach a former support line at $0.49 before the week is through.
In detail, the token formed a bearish Death Cross, marked on the weekly chart above. The formation occurs when a short-term exponential moving average EMA crosses below a long-term EMA. In MATIC’s case, the 50-week EMA (red wave) slid below the 200-week EMA (blue wave), signaling a bearish phase ahead for the asset.
Meanwhile, several fundamental news from Q3 explain the bearish price action and back the pessimistic expectations.
Project Exodus from Polygon
As per the initial announcement in August 2023, the Y00ts NFT Collection, with a floor price of $2,600, is leaving Polygon for Ethereum. The team noted they “still love Polygon” but strive to reunite Y00ts with DeGods, another NFT collection. Y00ts reiterated their plans on Oct 9, saying the team is “SUPERSIKED” about the migration.
Meanwhile, the cross-chain messaging protocol LayerZero followed the exodus trend and replaced Polygon’s Oracle with Google Cloud in September 2023. Ryan Zarick, co-founder and chief technology officer of LayerZero, explained that the decision had security reasons.
Unlike running a single validator in Polygon or Ethereum and being unable to stop attacks, he said that Google Cloud will be able to veto the attack. The press release further stated that Google Cloud Oracle will verify messaging across 15 chains, including Ethereum, Arbitrum, Optimism, Polygon, BNB, and Avalanche.
Competitors leave Polyon behind
Polygon’s Zero Knowledge Ethereum Virtual Machine (zkEVM), a layer 2 blockchain that supports Ethereum’s virtual machine, lags behind its competitors in total value locked (TVL). According to on-chain data tracker DefiLlama, Polygon zkEVM’s TVL dropped nearly 46% in the previous two months and stood at $19 million on Oct 10.
Despite declining 20% in the same period, TVL of a similar EVM supporting project, ZKSync ERA, stood at $118 million on Oct 10.
Furthermore, several leading decentralized applications (dApps) on Polygon lost many active users throughout Q3 and the previous week.
For example, Web3 building dApp Galxe lost 35% of its 7-day active addresses, while blockchain game protocol GOQii went from over 43,000 unique active wallets (UAW) to just over 8,000 on Oct 9.
All the listed reasons have likely contributed to MATIC’s bearish price action this week and backed the bearish expectations of more loss ahead.
