Polygon (MATIC), earlier known as Matic Network, rose over 10 times between March 2021 and its all-time high in May 2021 before crashing almost 66 percent in the recent crypto meltdown starting from May 19, 2021. But, the digital currency recovered compared to most other crypto peers after the crash. The recovery and the previous stellar returns are enough to divert the attention of crypto enthusiasts to this coin.
Not just that, Polygon at present has the most number of partnerships in the crypto space. It is also working on a wider mission ever since its rebranding.
Given these factors and rekindled interest in Polygon, should investors make bets on the coin? To get an answer to this, it’s first important to understand how the value of any cryptocurrency is determined?
According to Prateek Singh, Founder, LearnApp.com, the value of any cryptocurrency is derived from two factors: the hype (increase in demand due to social media/influencers) which is generally short-term in nature and may result in the fate that Dogecoin saw in the recent crash.
The other factor, Singh said, is the fundamental value that it provides.
“Matic is a layer 2 scaling solution built on the Ethereum blockchain. It helps speed up transactions made on ethereum based DApps(Decentralized Applications). So, Matic does provide a fundamental value to DApps developers,” he added.
Matic, according to Singh, could hence perhaps be the main solution to the Ethereum scaling problem and solve the blockchain trilemma.
However, Prateek warns against buying any cryptocurrency (including Matic) without understanding its fundamentals.
“It will be more interesting if people start learning about how crypto works, what are Dapps, what fundamental value does Matic provide, etc and based on that analysis they should take an investment call,” he suggested.
Avinash Shekhar, Co-CEO of ZebPay calls MATIC one of the best performing crypto assets. However, he is also of the view that individuals should learn about the asset and the technology backing it before investing in any cryptocurrency.
Talking about the challenges of Polygon (MATIC), CoinDCX spokesperson said that it may face competition from projects like PolkaDot, Cosmos, or even the much-anticipated Ethereum 2.0 in the future.
These projects, he added, once operational, could overshadow Polygon and lead to significant headwinds for further price appreciation. Thus, investors should research important support and resistance levels before taking any fresh positions.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
(Edited by: By Ajay Vaishnav)