In the ocean of altcoins, Polygon (CCC:MATIC-USD) is one coin that’s worth holding in the cryptocurrency portfolio. MATIC has more behind it than wild speculation.
The number of cryptocurrencies has surged with growing investor interest. Data indicates that there are 7,815 coins listed globally in 475 exchanges.
As altcoins surge and with no dearth of meme coins, investors who are looking for long-term ideas need to be careful in their due diligence.
Before taking a deeper look into MATIC, we should remind investors that cryptocurrency investments always include a high degree of volatility. It didn’t take any time at all for Bitcoin (CCC:BTC-USD) to plunge from highs of $64,800 to lows of $32,000 in the recent cryptocurrency meltdown.
Altcoins can be even more volatile. However, non-speculative altcoins can help in reducing the portfolio beta. I believe that MATIC is likely to be relatively stable as the core business progresses.
From a price action perspective, MATIC touched highs of $2.62 in May 2021. As Bitcoin plummeted, MATIC also declined sharply to current levels of around $1.30.
It seems very likely that the worst of the correction is over. I wouldn’t be surprised if the cryptocurrency is back to its all-time highs in the next 12-24 months. This would imply an upside of 87% from current levels.
Positive Business Developments
As an overview, Polygon is a blockchain scalability platform. The platform aims to address the challenges faced by Ethereum (CCC:ETH-USD) related to high fees and a lower transaction per second rate.
The good thing about Polygon is that it already has several use cases. Infosys (NYSE:INFY) is an $82 billion information technology company in India. In May 2020, Infosys joined Polygon (formerly Matic) as an early validator.
This marked the beginning of the collaboration with the Indian technology giant. In April 2021, Polygon partnered with Infosys to develop the M-Setu app, which will “act as an open-source bridge that allows enterprises to cross-operate using the Ethereum blockchain.”
Recently, the Indian state of Maharashtra on-boarded blockchain technology for issuing Covid-19 test certificates. Polygon has been a part of this project. It’s also worth mentioning here that Maharashtra is likely to come out with a “State Blockchain Policy” relatively soon. If more Indian states adopt blockchain, Polygon has a big addressable market.
From a broader perspective, Polygon stands to benefit as the number of apps related to decentralized finance, games and marketplaces increase globally. The Polygon architecture is already being used for projects related to these segments.
Recently, billionaire owner of NBA’s Dallas Mavericks, Mark Cuban, invested in MATIC. Polygon co-founder Sandeep Nailwal believes that the investment from Cuban is a “stepping stone for Polygon as it will attract more Tier I investors in the US towards Polygon ecosystem.”
If this does happen in the coming quarters, it’s likely that MATIC will trend higher.
The cryptocurrency space faces regulatory headwinds and that has impacted the bull market. However, it does give investors another chance to accumulate some attractive names from the cryptocurrency space.
I would rather focus on some quality altcoins than look at Bitcoin or Ethereum.
Recently, El Salvador became the first country to classify Bitcoin as an asset class. There are some speculations that India is also likely to classify the cryptocurrency as an asset class. If this happens, I expect MATIC to surge higher with Polygon’s business base in India.
Overall, MATIC seems attractive after correction. Further, with some big money getting into the altcoin, a fresh rally seems likely.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.