Whale Acquires MATIC Despite Declining Price and Delistings
Polygon (MATIC) is currently facing uncertainties as the token undergoes migration to the new POL token and is being delisted from exchanges. However, despite these challenges, there has been a notable whale accumulating MATIC by withdrawing it from Coinbase.
While MATIC is experiencing price weakness and seeking direction in the market due to the ongoing swap, this whale has been acquiring large amounts of MATIC over the past few days. The whale’s wallet now holds more than 18.79M MATIC, valued at $6.2M, which was withdrawn from Coinbase and stored in a highly liquid wallet containing $54M worth of Ethereum (ETH).
It is important to note that the withdrawal of MATIC from Coinbase was not done for the sake of migration, as Coinbase has already arranged for an automatic switch of all MATIC balances to POL. Instead, the whale seems to believe in the potential future appreciation of MATIC and has chosen to store it in anticipation of such gains. As native MATIC on the Polygon chain will automatically convert to POL without any risk of losses.
The whale’s wallet has previously invested in successful Ethereum-based projects, including top DeFi protocols. However, Polygon is currently struggling to find its place among more active Layer 2 chains. Nonetheless, Polygon still maintains over $1B in value locked, with active versions of popular platforms like Uniswap and Aave. It also receives significant inflows, totaling over $732M, from Ethereum.
The future price recovery of MATIC or POL remains uncertain. MATIC, after its 2021 rally, has retraced to levels similar to before the rally, trading between $0.35 and $0.40. While some predictions in the past suggested a price range above $5 and even as high as $10, the token currently shows no signs of significant upward movement.
Polygon was previously a major player in the 2021 gaming boom, hosting popular Web3 games. However, some of the previously top applications on Polygon are now less active. Polymarket, the prediction hub, continues to be the primary driver of traffic on Polygon, especially during the US Presidential election season.
Despite the demand for MATIC to pay gas fees, the token remains near the lower range in terms of price. Open interest in MATIC is also at three-year lows, indicating a lack of recovery. However, traders are still cautious about shorting MATIC, as it is seen as a potential breakout token with a relatively low entry point.
Furthermore, MATIC is currently awaiting its migration to POL on a 1:1 basis, and until then, it lacks the momentum for a significant price move. The delisting of ERC-20 versions of MATIC from exchanges has already taken place, and holders of those versions need to utilize a specially created migration smart contract. The deadline for switching fully to POL, which will become Polygon’s main gas token, has not been determined.
Partially migrated POL tokens are currently trading around $0.32, causing concern among investors after continuous decline over the years. Some believe that Polygon may need to launch an entirely new asset, as both MATIC and POL fail to generate investment demand. MATIC has experienced a decline of over 40% since June and has fallen from its yearly peak in March at $1.15.
In addition to its other challenges, Polygon also faces the issue of being considered a legacy chain. The potential launch of Polygon 2.0, as a zero-knowledge Layer 2 solution, may offer a way out. Currently, Polygon is not truly decentralized as an L2 chain, failing to meet the definition of a true ZK-rollup.
Polygon is also losing users, with active daily users on the original Polygon chain decreasing from 1.2 million to approximately 450,000 in the past three months. Other chains offer similar features as Polygon without the need to hold MATIC for gas fees. Polygon ZK EVM is attracting new users and witnessing even lower activity on its beta main network version.
Despite being one of the chains with the lowest gas fees, as low as $0.002 per transaction, Polygon’s future depends on the sustained success of Polymarket. If Polymarket slows down, Polygon could face a decline in activity, potentially dragging down the price of MATIC or POL even further.