Polygon (MATIC) Hits Activity Milestone Yet Faces Market Struggles – Here’s Why

• The Polygon network has recently achieved a significant milestone in daily active addresses.
• However, there are concerns regarding the network’s DeFi performance and overall financial metrics.
• Despite the high activity, Polygon’s TVL and DEX volumes have seen a notable decline.

Polygon Network: High Activity Amidst Financial Challenges

Polygon’s Activity Milestone

The Polygon network has consistently surpassed 1 million daily active addresses for 65 consecutive days. This achievement highlights the growing interest and engagement within the Polygon ecosystem. The network’s ability to attract and retain users is a testament to its robust infrastructure and the value it provides to its community.

Decline in DeFi Metrics

Despite the impressive user activity, Polygon has faced challenges in its DeFi sector. The Total Value Locked (TVL) on the network has dropped significantly from $1.2 billion to $980 million. Similarly, Decentralized Exchange (DEX) volumes have plummeted from $320 million to $50 million over recent weeks. These declines indicate potential issues in user engagement and capital allocation within Polygon’s DeFi ecosystem.

Impact on Revenue and Development

The decrease in DeFi activity has had a direct impact on Polygon’s revenue. According to data from Token Terminal, the network’s revenue has fallen by 42% over the past month. Additionally, development activity on the network has decreased by 14%, as measured by the number of code commits. This reduction in development efforts could have long-term implications for the network’s growth and innovation.

Price Movement and Market Sentiment

Polygon’s native token, MATIC, has also experienced a bearish trend in its price movement. Since April 9th, MATIC has shown multiple lower lows and lower highs, indicating a sustained downtrend. The token’s price has been consolidating between $0.7802 and $0.6346, struggling to break through the resistance level. The Relative Strength Index (RSI) has also fallen, suggesting weakened bullish momentum. However, the Chaikin Money Flow (CMF) has increased, indicating a surge in capital inflow into MATIC.

Network Growth and Holder Behavior

The Network Growth metric for MATIC has declined, showing reduced interest from new addresses. On the other hand, the Market Value to Realized Value (MVRV) ratio has risen, suggesting that most holders are currently profitable. This profitability could incentivize holders to sell their tokens, potentially putting further downward pressure on MATIC’s price.

Conclusion

In summary, while Polygon has achieved a significant milestone in daily active addresses, it faces challenges in its DeFi performance and overall financial health. The decline in TVL, DEX volumes, and development activity, coupled with bearish price trends, indicates that the network needs to address these issues to sustain its growth. Investors and stakeholders should closely monitor these developments to gauge Polygon’s future trajectory.