MATIC token makes headlines as its popularity soars
On February 26, the price of MATIC surpassed $1.05 for the first time in 2024, indicating a potential bullish trend as the Polygon network activity continues to rise in correlation with the boom in the decentralized finance (defi) market.
Layer-2 networks such as Polygon (MATIC), Optimism (OP), and Arbitrum (ARB) are leading the industry in facilitating various defi activities, including lending, borrowing, payments, and smart-contract-based decentralized finance.
Recent weeks have seen a surge in investment in Ethereum (ETH) and defi protocols, driven by the anticipation of Federal Reserve rate cuts and the increasing focus on risk assets by investors. As the S&P 500 reached historic highs following NVIDIA’s positive earnings, the defi market in the crypto sector also experienced significant capital inflows.
The price action of MATIC and OP has closely followed the trends in the total defi market cap, as shown by TradingView’s charts. Between February 1 and February 27, the total defi market cap attracted $30 billion in inflows, representing a 43% increase. This aligns with MATIC’s price growth of 42% during the same period.
The defi market is currently at a 22-month high, and with the historic level of deposits in Ethereum liquidity staking, it is expected that more capital inflows will occur in the coming days. This could create a sustained bullish demand cycle for Layer-2 scaling projects like Polygon.
The level of user activity on the Polygon network also confirms the correlation between the defi boom and MATIC price action. Santiment’s daily active addresses (DAA) measure the number of unique addresses conducting valid transactions on the network within 24 hours. Despite price fluctuations, Polygon has consistently attracted high user activity since the beginning of the year. On February 25, the DAA reached a five-month peak of 427,000.
The increasing number of daily active addresses is a positive indicator that the services provided by the Polygon network are in demand. When combined with a historical price uptrend, it suggests that the rally is driven by organic utility rather than speculative FOMO.
The surge in Polygon’s activity during the defi boom further solidifies its position as one of the most sought-after scaling networks. This positions MATIC to capture more value as the defi market continues to gain traction in the coming weeks.
Based on market trends, MATIC’s price is predicted to reach the next target of around $1.20. However, in the short term, the bulls must first overcome initial resistance in the $1.10 territory.
If the defi market boom continues to accelerate, MATIC could capitalize on the network traction to rally above $1.20. However, if profit-taking occurs and the price drops below $0.90, this bullish prediction may be challenged. Nevertheless, given the overall positive sentiment surrounding Layer-2 token markets, the possibility of bearish prospects seems unlikely.
Addresses that bought MATIC at an average price of $0.91 could offer significant short-term support in case of a price drop.
The potential for further growth and positive sentiment in the Layer-2 token markets suggests that monitoring the developments in MATIC and the overall defi market will be crucial in the coming months.
