It appears that the price of Polygon will rise by at least 30% after a major upgrade on January 18, which will result in a significant portion of the original MATIC token being withdrawn.
The improvement proposal was called EIP-1559 and originally appeared as part of the so-called Ethereum London hard fork on 5 August. The proposal actually began to destroy or “burn” some of the fees paid to miners through Ethereum (ETH).
Traders and investors raised their prices on Ether before and after the EIP-1559 update, noting that it made Ether a deflationary asset for the first time in history. For example, a model created by Ethereum founder Justin Drake claims that EIP-1559 will reduce the annual supply of ether by 1.6 million ETH.
Matic aims for new records
Polygon, which acts as a layer 2 protocol designed to measure the scalability issues prevalent in Ethereum, implemented the test application EIP-1559 on December 14, 2021. Since the launch of network testing, the price of MATIC has risen almost 30% to $ 2.35, including a short spike towards the top. His record is around $ 3.
MATIC / USD daily chart. Source: Trading View
In theory, lower supply compared to higher demand makes the asset more valuable in the bidder’s eyes.
This classic economic link has helped increase the demand for cryptocurrencies such as Bitcoin (BTC) in the past. Production is halved every four years with a limited supply of 21 million units. This raises the question, can the price of MATIC rise in the same way? Alexander Mamasedikov, one of the founders of Mineplex, believes so.
Mamasedikov told the Cointelegraph that the EIP-1559 will have a positive effect on the price of the MATIC, adding that it could easily rise to an all-time high after a technical upgrade.
“During periods of price recovery, investors often look for both technical and basic features to support the coin, and Polygon swings in the same way,” he said, adding:
“While Polygon is still the best version of Ethereum in terms of lower transaction costs, it also pleases retail investors with its currently lower price compared to other Ethereum or smart contract networks.”
What do Polygon Technicians Say?
MATIC has been on an upward trend within a rising channel pattern since July 2021, which is evident from at least two heights and at least two cooperating downturns.
The coin recently tested the lower channel’s trend line around $ 1.89 as support, followed by an upward correction to $ 2.50. It now acts as resistance and it turns out that the $ 2.50 level is also close to the 1.00 Fibonacci line close to $ 2.44.
The daily MATIC / USD chart is characterized by a bullish channel pattern. Source: Trading View
However, MATIC may try to overcome the $ 2.44 resistance due to the January 18, 2015 EIP-1559 update. This move will be aimed at testing the temporary upside target of around $ 3, which represents an upside of around 30%.
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Meanwhile, if the EIP-1559 factor lasts longer than expected, the MATIC price may try to continue rising towards the 1,618 Fibonacci line near $ 3.52. Conversely, a $ 2.44 discount can have Polygon’s connection support retested for a negative outbreak.
Such a move may nullify a bullish setup as discussed above. All of this, combined with exposure to a MATIC correction of around $ 1.77 or less.