Whale accumulates MATIC despite price making new lows on delistings

Polygon (MATIC) is facing an uncertain future. MATIC is being migrated to the new POL token, facing delistings. Despite this, a whale was seen withdrawing MATIC from Coinbase.

Polygon remains one of the top L2 chains with a first-mover advantage. However, the MATIC token is facing headwinds on the market. The token is in the process of swapping and is still seeking direction.

Despite the price weakness, a whale has been accumulating MATIC for the past few days. The whale’s wallet accrued more than 18.79M MATIC, valued at $6.2M. The whale withdrew MATIC from Coinbase in the past three days, storing the tokens in a highly liquid wallet also containing $54M in Ethereum (ETH).

An Ethereum whale has been accumulating MATIC in the past few days. | Source: Nansen

Withdrawing MATIC from Coinbase was not done for the sake of migration. Coinbase has arranged to migrate from MATIC to POL by automatically switching all balances. Instead, the whale has stored MATIC with the potential for future appreciation. Native MATIC on the Polygon chain will convert automatically to POL, and is not at a risk for losses.

The whale’s wallet has invested in one of the most successful rounds of Ethereum-based projects, including the top DeFi protocols. Polygon is among this generation of projects, though it is now struggling to find its way among more active L2 chains.

Polygon still carries more than $1B in value locked, with active versions of Uniswap and Aave. The Polygon L2 chain also carries significant inflows of more than $732M from Ethereum. The chain has robust legacy liquidity, but faces headwinds from the fast and wide adoption of Base. During the 2021 bull market, Polygon served a similar role as Base, carrying the wave of NFT, gaming and DeFi projects.

Will MATIC or POL recover to a higher price range?

After years of trading, MATIC is now back to the levels before its 2021 rally, ranging between $0.35 and $0.40. MATIC behaves as a utility token, peaking at $2.87. During its history, MATIC saw predictions of a price range above $5 and as high as $10.

Polygon was also key to the 2021 gaming boom, hosting some of the hottest Web3 games. After a few years, the former top apps on Polygon are less active.

In 2024, the main app supporting Polygon traffic remains Polymarket, the prediction hub running hot during the US Presidential election season.

Polymarket is the main driver of traffic on Polygon, based on the US elections season bets. | Source: Dappradar

Despite demand for MATIC to pay for gas fees, the token remains near its lower range. Open interest for MATIC is still near three-year lows, with no signs of recovery. Even at this low price range, MATIC traders are cautious about shorting. MATIC is still seen as a potential breakout token, with a relatively low entry point.

MATIC is also stuck waiting for its migration to POL on a 1:1 basis. Until then, the asset lacks momentum for a bigger price move. Exchanges already delisted ERC-20 versions of MATIC. Holders of those versions need to go through the specially created migration smart contract. There is no deadline for fully switching to POL, which will become Polygon’s main gas token.

The partially migrated POL tokens trade at around $0.32, still worrying investors after years of sliding. For some, Polygon may have to launch an entirely new asset, as both MATIC and POL fail to spark investment demand. MATIC has been down more than 40% since June, and abandoned the yearly March peak at $1.15.

Polygon also faces the problem of being a legacy chain. The one way out is the potential launch of Polygon 2.0, as a zero-knowledge L2. For now, Polygon is still not a truly decentralized L2 chain, failing the definition of a true ZK-rollup.

The other problem is that Polygon is also bleeding users. In the past three months, active daily users on the original Polygon chain fell from 1.2M down to around 450K. Other chains offer the same features as Polygon, without the demand to hold MATIC for gas fees. Polygon ZK EVM is growing a new user base and marks even lower activity in its beta main net version.

Polygon is still one of the cheapest chains in terms of gas fees, with as low as $0.002 per transaction. Despite this, if Polymarket slows down, Polygon will start turning into a ghost chain, further dragging down the price of MATIC or POL.

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