Polygon‘s MATIC (MATIC) experienced a significant price increase on July 13, driven by several key factors, including a recent favorable court ruling for XRP (XRP), increased decentralized application (DApp) activity on the Polygon network and the highly anticipated launch of Polygon 2.0.
Over just 12 hours, MATIC witnessed a remarkable 24% rally, propelling its price to $0.89 on July 13, reaching its highest level in five weeks. Although the initial excitement subsided, the token managed to sustain a daily gain of 15%, indicating growing demand from traders and investors.
MATIC seizes opportunity from the SEC’s loss
On July 13, the United States District Court for the Southern District of New York ruled that XRP is not a security. This court decision could have far-reaching implications for other altcoins, particularly after the U.S. Securities and Exchange Commission specifically classified MATIC as a security during its legal battle against Coinbase on June 6.
As investors evaluated the risks associated with holding and trading assets that could potentially face delisting from regulated centralized exchanges, the price of MATIC plummeted by 37% over the following five days, hitting its lowest point in 11 months on June 10.
The court ruling determined that XRP holders do not have a reasonable expectation of earning profits from the efforts of others. This outcome represents a positive development for the entire cryptocurrency industry.
Apart from the immediate impact on MATIC, which held an initial coin offering (ICO) in 2019, the court decision also affects Ethereum, upon which the Polygon network relies for its infrastructure. Ethereum’s Ether (ETH) has faced a similar risk of being deemed a security, particularly during its ICO phase. On April 18, SEC Chair Gary Gensler declined to clarify whether ETH was a commodity or a security during a Congressional committee hearing.
Polygon gains traction as Ethereum scalability solution
Additionally, DApp activity on the Polygon network has substantially grown in recent weeks. This development bodes well for MATIC, indicating that the network is possibly gaining traction as the go-to scalability solution for the Ethereum network.
According to data from DappRadar, the number of active DApps on Polygon has surged by 47% in the past 30 days.
The increase in DApp activity spans various sectors, including interoperability, nonfungible token platforms, Web3, decentralized exchanges and games.
Anticipating a MATIC price surge with Polygon 2.0 upgrade
The Polygon development team proposed a token upgrade on July 13 that would allow holders to validate multiple chains. The proposal awaits community approval and, if successful, will result in a rebranding from MATIC to POL.
According to the announcement, the Polygon 2.0 upgrade would facilitate the support of multiple chains without compromising security. It would also introduce incentive streams for validators, including zero-knowledge proof generation. If launched, the upgrade has the potential to further drive up the price of MATIC.
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MATIC price poised for more gains, but caution needed
With a total value locked of $1 billion on the Polygon network, the layer-2 scaling solution has found its niche among users of decentralized applications. Importantly, this number has grown from $878 million in the previous month, indicating increasing demand for its processing capabilities.
While it may be premature to predict the timing and potential impact of the proposed Polygon 2.0 upgrade, other competing solutions, such as Arbirtrum and Optimism, are also experiencing growth. Privacy implementations utilizing zero-knowledge proofs may also capture significant market share due to their unique features currently unmatched by the Polygon network.
In essence, there are no apparent obstacles preventing MATIC from reclaiming the $0.90 support level observed prior to the SEC’s action against Coinbase on June 6. However, investors will likely await further development confirmation before expecting a more consistent bullish momentum for MATIC.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.