Polygon (MATIC) is wobbling in a murky technical environment, down 4.2% to $0.557 on Friday. The leading Ethereum Layer 2 scaling protocol has ignored sentiments around the development of a major upgrade, Polygon 2.0.
From a long-term perspective, a rebound is brewing, however, short-term analysis reveals the possibility of another sweep at lower support areas – tentatively $0.54 and $0.493, respectively.
Polygon 2.0 Update – MATIC Price Drops
Polygon developers published another significant update on X (formerly Twitter) regarding the impending launch of the protocol’s upgrade, Polygon 2.0. According to the announcement, POL contracts are set to go live on the Goerli testnet, marking “a major step towards bringing Polygon 2.0 to life.”
Today, as a result of community consultations, POL contracts will be live on Goerli testnet.
A major step towards bringing Polygon 2.0 to life.
Based on the community’s feedback during the PIP governance process, PIP-24: Change EIP-1559 Policy & PIP-25: Adjust POL Total Supply,… pic.twitter.com/li8OF0o3jC
— Polygon Devs 📍 DevX Global Tour (@0xPolygonDevs) October 4, 2023
After reviewing feedback from the community, developers set the total supply of POL, the token expected to power the ecosystem on the new protocol. The development team said that this step is significant to the “EIP-1559 burn system needed for Phase 0 of Polygon 2.0.”
“In the coming weeks, the first steps of the new proposed governance for Polygon 2.0 will be shared, the core of which will be a new Ecosystem Council composed of thought leaders and technology experts; pillars of the Web3 community with substantial security credentials,” Polygon developers said via X.
The community has been requested to stay tuned for more updates, especially on the POL testnet as the development team strives to “build the value layer of the internet.”
On the other hand, MATIC price is holding slightly above support provided by the 21-day Exponential Moving Average (EMA) (red) after bulls were rejected from resistance highlighted by the 23.6% Fibonacci retracement level which coincidently forms a confluence with the falling trendline.
The Relative Strength Index (RSI) reinforces the bearish outlook as the uptrend weakens paving the way for a pullback. Support at the 21-week EMA must hold, otherwise, Polygon might drop to $0.493 in search of support.
Despite the glaring bearish outlook, there is still hope for a Polygon price recovery based on the falling wedge pattern on the same daily chart. As a reversal pattern, the wedge forms toward the end of a downtrend.
A breakout would be expected if MATIC price obliterates resistance at the falling trendline – backed by a significant increase in trading volume. It is recommended to place buy orders above the wedge pattern amid expectations of a run up to $1.
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