- Polygon price has been in a strong bullish trend in the past few days.
- It has formed a cup and handle pattern on the daily chart.
- There are concerns that the $10 billion token is overvalued.
Polygon price has been in a spectacular rally in the past few months as demand for the coin rose. MATIC jumped to a high of $1.25, the highest point since November 8 of last year. It has been among the best-performing big-cap coins having jumped by over 64% from the lowest level in December last year.
Polygon NFTs slipped in January
It is extremely difficult to value cryptocurrencies. Unlike stocks, there are no available valuation metrics like discounted cash flow (DCF) and price-to-earnings (PE) multiple. Nonetheless, analysts focus on the performance of the ecosystem to estimate the value of a cryptocurrency.
In April 2022, I warned that Cardano was severely overvalued after looking at the performance of its ecosystem. At the time, Cardano had no meaningful ecosystem by looking at its DeFi ecosystem.
Polygon, a network with a market cap of over $10 billion also seems like it is still highly overvalued. This performance is mostly because of the partnerships it has done with well-known companies like Adidas, Disney, and Stripe. Also, Polygon has thousands of developers in its ecosystem.
Read more: How to invest in Polygon.
However, a closer look at its ecosystem shows that the situation is not all that good. Looking at DeFi, we see that it has over 300 DeFi protocols in its ecosystem. Of these protocols only 230 alone have a total value locked of over $10,000 and only 20 have a TVL of over $10 million. In all, Polygon’s TVL in MATIC terms has a TVL of 1.39 billion, down from an all-time high of over 9.6 billion.
Meanwhile, its NFT ecosystem is not doing well. In January, it processed 418,211 transactions with the average sale being $10.57. A month earlier, it had handled 557,463 transactions with an average sale of $28.28. Total sales in USD dropped from $15.7 million in December to $4.42 million in January Similarly, the number of unique sellers fell from 81,420 to 65,940.
Polygon price forecast
Turning to the daily chart, we see that the Polygon price has been in a strong bullish trend in the past few weeks. It has jumped to the highest point since November 8. Polygon has also been supported by the 25-day and 50-day moving averages.
MATIC is also in the process of forming a cup and handle pattern that is shown in orange. In price action analysis, this pattern is usually a bullish sign. At the same time, the Relative Strength Index (RSI) has been in a strong upward trend. Therefore, despite its valuation, there is a likelihood that Polygon price will continue rising.
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