Polygon (CCC:MATIC-USD) crypto has been one of the winning altcoins of 2021. MATIC started 2021 at around $0.0191. Its 52-week range has been $0.0155-$2.6800 and hit an all-time-high (ATH) in mid-May. Now, it is hovering around $1.846. Its market capitalization (cap) stands at nearly $11.2 billion.
Thus, year-to-date (YTD), MATIC has returned over 9,780%. Put another way, the proverbial $1,000 invested in the crypto five months ago would now be worth close to $99,000.
By comparison, this is how much several other cryptos have returned so far in 2021:
- Bitcoin (CCC:BTC-USD) — up about 26% YTD with a market cap of $674.9 billion;
- Cardano (CCC:ADA-USD) — up about 724% YTD with a market cap of $48.4 billion;
- Dogecoin (CCC:DOGE-USD) — up about 6,465% YTD with a market cap of $40.5 billion;
- Ethereum (CCC:ETH-USD) — up about 232% YTD with a market cap of $287.9 billion.
But MATIC has not been spared the recent token sell-off. Therefore, potential crypto investors are wondering whether now could be a good time to enter Polygon.
Analysts highlight the platform is well-positioned to realize its mission to become an important crypto project due to its competitive advantage in Decentralized Finance (DeFi) transactions.
Therefore, if you are a long-term investor with a two- to three-year timeframe, you could consider investing in MATIC. I expect the price to reach $5 in the months to come.Here’s why.
Why Is Polygon under the spotlight?
Polygon has become one of the most promising cryptocurrencies of late. Formerly known as the Matic Network, Polygon provides a framework for building Ethereum-compatible blockchains. It is one of the most innovative projects in the blockchain space that aims to improve blockchain scaling and interoperability.
When a blockchain system like Polygon is scalable, it means the protocol achieves a high level of transactions per second (TPS). A recent Ph.D. thesis by Adem Efe Gencer of Cornell University highlights, “Scalable blockchains are capable of delivering a target throughput and latency in the presence of increasing workload.”
Meanwhile, interoperability means different blockchains are able to exchange information among themselves. As a result, a network of blockchains can be created, a crucial step for the broader adoption of blockchain platforms and cryptos.
The race for a cutting-edge interoperability solution is still in progress in the blockchain space. Polygon’s rivals include Polkadot (CCC:DOT-USD), Cosmos (CCC:ATOM-USD), and Avalanche (CCC:AVAX-USD). They are all getting ready to introduce their solutions.
Polygon claims that its network fully benefits from Ethereum’s network effects and is inherently more secure and powerful compared to its peers.
High gas fees on Ethereum have provided a significant tailwind for MATIC as the Polygon platform allows users to escape such fees. The number of applications built on Polygon has increased to over 400 as a result. Applications and users mainly come from gaming, non-fungible tokens (NFTs), and DeFi.
The Bottom Line on MATIC
Polygon is a layer-2 network developed to add extra scalability to Ethereum and improve interoperability between its blockchains. In 2021, the crypto has had a fantastic run-up until the second half of May. MATIC bulls are currently resting as the broader crypto market decides on the next move.
Nonetheless, the altcoin is likely to have significant upside potential, once the dust settles around the recent sell-off in the cryptocurrency market.
As bullish crypto investors search for the next altcoin with explosive potential, MATIC is poised to benefit from its DeFi advantages. By processing transactions at a higher speed and lower cost than Ethereum, it should get increased attention among crypto enthusiasts.
Investors should, however, be cautious about further price volatility in the short term. Polygon is a high-risk/high-return play and fully exposed to future declines in the broader cryptocurrency market.
Patience might be required before MATIC sees new highs in the rest of the year. However, a $5 price target by the end of 2022 is not necessarily off the table.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.