Polygon Could Stay Stable Amid Crypto Market Uncertainty

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Most of the major cryptocurrencies continue to struggle after the sell-off in late November and early December, but not Polygon (CCC: MATIC-USD). The token has risen over 50% over the past month and traded near all-time highs, while Bitcoin (CCC: BTC-USD) is down 12% and Ethereum (CCC: ETH-USD ) is down 5%.

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You could say that Polygon has shown resilience during this recent market maelstrom. Chalk up a series of positive developments. But what’s more important to investors today is whether it can find its way to higher prices.

Given the rise of the Polygon Star, he should be able to hold on to his recent gains. But given the current crypto market environment, staying stable may be the best traders can hope for in the near term. But even if MATIC remains limited in the coming months, long-term investors could see their patience rewarded.

Why Polygon Outperformed Its Peers

Why have fears of omicron variants and the specter of a more hawkish Federal Reserve policy put pressure on Bitcoin, Ethereum, and “Ethereum killers,” but not MATIC?

As I said above, this is due to several positive developments for this token’s network, Polygon. Over the past few weeks, we’ve seen dozens of auspicious headlines for its Layer 2 Scaling Solutions platform. These news include potentially groundbreaking partnerships, a suspected investment in the platform. by multiple venture capitalists and ongoing reports offering developers a workaround to the scaling issues that still plague the Ethereum network.

All of this points to increased use of Polygon’s platforms, which in turn justifies a higher valuation for MATIC. As a Seeking Alpha commentator reported earlier this month, its market cap is well below that of Solana (CCC: SOL-USD) and Cardano (CCC: ADA-USD). From a commentator’s perspective, that wide gap doesn’t make sense given Polygon’s potential to catch up with both platforms.

Even after the rise of MATIC and the decline of SOL and ADA since the publication of this article, this gap persists. At current prices, MATIC has a market cap of $ 19 billion, while the two “Ethereum killers” have market caps of $ 58.4 billion and $ 49.3 billion, respectively. While this factor alone indicates a rapid jump of two or three times, keep one thing in mind: given the current environment of the crypto market, it may take a while for this to happen.

Another great race may take a while

Based on the factors mentioned above, a long position in MATIC today can seem like an overwhelming path to profits. It has all the ingredients in place to see another price breakout. But that doesn’t mean it will happen in the next few months. The collapse of the crypto market could continue for some time.

Granted, MATIC has remained on an upward trajectory, despite some wild swings, in large part thanks to the flow of positive news from Polygon that I just mentioned. But a slowdown in the flow of positive news or increased downward pressure on cryptos caused by a cycling of risky assets following the Fed’s monetary tightening could send MATIC back below $ 1.50 instead of heading towards $ 2.75, $ 3 or even $ 4 per token.

This would be bad news for traders who view the token as a short-term game. However, if you think of it as a long-term bet, maybe now is the time to buy. Once the excitement returns to the crypto market, this token could continue to rise, closing the valuation gap between it and “Ethereum killer” precursors like Cardano and Solana.

Polygon Verdict: Consider It Another High Quality Crypto

Granted, I’m not sure if “this time is different” for crypto or if it’s just the last bubble that should continue to deflate, much like what happened to internet stocks in the years following the crash. dot-com. However, if you think otherwise, it can be a great opportunity. With its many strengths, Polygon is expected to achieve a valuation comparable to that of other top altcoins.

If you’re optimistic about the future of crypto, consider Polygon another high-quality game. Just keep in mind that the latest wave of fear, uncertainty and doubt in the market could delay its next big move upward.

As of the publication date, Thomas Niel held LONG positions in Bitcoin and Ethereum. He did not hold any of the other titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Thomas Niel, contributor for InvestorPlace.com, has been writing individual equity analysis for online publications since 2016.

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