Polygon: Hold On To MATIC For The Long-Term

Polygon (CCC:MATIC-USD) altcoin has been one of the hottest cryptos of the year. MATIC began 2021 at around $0.019, and hit an all-time-high (ATH) in mid-May. The 52-week range has been $0.015 – $2.680. Now, MATIC-USD is hovering around $1.139.

A concept image for the Polygon (MATIC) crypto.
Source: Shutterstock

Year-to-date (YTD), MATIC has returned over 5,800%. Put another way, the proverbial $1,000 invested in the crypto five months ago would now be worth close to $59,000. Polygon’s market capitalization (cap) stands at nearly $7.2 billion.

By comparison, this is how much several other widely-followed digital currencies have returned in the first half of 2021:

  • Bitcoin (CCC:BTC-USD) — up about 21% YTD with a market cap of $660.3 billion;
  • Cardano (CCC:ADA-USD) — up about 644% YTD with a market cap of $43.5 billion;
  • Chainlink (CCC:LINK-USD) — up about 73.6% YTD with a market cap of $19.4 billion;
  • Dogecoin (CCC:DOGE-USD) — up about 5,317% YTD with a market cap of $33.6 billion;
  • Ethereum (CCC:ETH-USD) — up about 191.6% YTD with a market cap of $251.9 billion;
  • Ripple (CCC:XRP-USD) — up about 197.3% YTD with a market cap of $66.3 billion.

In other words, YTD return percentages for these cryptos of various market caps have been rather different. But none of them, including MATIC-USD, has been spared the recent rapid sell-off in the digital currency space. As a result, many investors are wondering what might be next for Polygon.

If you’re a long-term crypto investor, you might want to ignore the short-term noise in digital coins and invest in Polygon. The altcoin is likely to become an important name in Decentralized Finance (DeFi) — a term that “has joined FinTech, RegTech, cryptocurrencies and digital assets as one of the most discussed emerging technological evolutions in global finance.” Let’s see why.

Polygon Is Improving Scaling and Interoperability 

Previously called the Matic Network, Polygon offers a framework to build Ethereum (Ether)-compatible blockchains. MATIC-USD, its native currency, ranks among the top 20 altcoins by market-cap. In order to use the network’s features, one has to own and utilize MATIC.

Analysts highlight Polygon’s potential for improving blockchain scaling and interoperability. Scalable networks achieve a large number of transactions per second (TPS). Research highlights, “Bitcoin encounters performance problems of low throughput and high transaction latency. Other cryptocurrencies based on proof-of-work also inherit the flaws, leading to more concerns about the scalability of blockchain.” Therefore, a network like Polygon, gets increased attention since it can deliver a higher output even as workload increases.

On the other hand, interoperability refers to the ability of different blockchains to exchange information among themselves. Both scaling and interoperability are necessary for achieving wider adoption and use of blockchain platforms and digital currencies. Other networks working on interoperability solutions include Avalanche (CCC:AVAX-USD), Polkadot (CCC:DOT-USD), and Cosmos (CCC:ATOM-USD).

InvestorPlace.com readers will likely be familiar with Ethereum’s high gas fees. On the other hand, the Polygon platform enables users to avoid such fees. The number of applications for gaming, DeFi and  non-fungible tokens (NFTs) that are built on Polygon now stand around 500. Billionaire investor and entrepreneur Mark Cuban has also become a big fan of Polygon.

The Bottom Line on MATIC-USD

Wall Street’s last decade has shown that share prices of widely-followed technology firms typically grow faster than their revenues. We’ve been witnessing a similar price action in many digital currencies. So far in 2021, Polygon has had an amazing run-up in price until the second half of May.

Despite the recent dark clouds over the crypto space, MATIC bulls believe a new leg up could soon start. Analysts also highlight Polygon’s ability to process transactions at higher speeds and lower cost than Ethereum. Therefore, the long-term outlook remains bright.

Yet, potential investors should be ready to embrace short-term choppiness in price. Like many other altcoins, MATIC-USD still is a high-risk/high-return crypto. Nonetheless, those with a two- to three-year horizon could potentially see Polygon reach $5.

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.


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