Lately, MATIC, the native token of Polygon, has pumped by more than 30% after Meta, the company behind Instagram, announced that it will be letting Instagram users be able to create, buy, sell and store NFTs on the Polygon and Solana blockchains. In addition, Instagram will be creating its own NFT marketplace. However, Meta also said that in its initial stages, the marketplace will only support Polygon NFTs - this could be the key reason why following this news, only MATIC pumped and SOL did not move.
Polygon NFT Marketplace is Bigger Deal Than Instagram
The reason why only MATIC jumped on the news could be that investors see the NFT marketplace as being more value accretive to a blockchain than having Instagram users be able to create and sell NFTs to their followers. We explore the reason below.
Meta Will Promote This Marketplace
The reason why being supported on the marketplace could be seen as a bigger deal than being on Instagram could be that the crypto investing public does not think that Instagram users would take up using blockchain and NFT within a short span of time, while tapping into an existing and readily available pool of NFT users with an NFT marketplace could drive up the usership sooner and thus drive up the value of a blockchain in quicker time. This could be the reason why MATIC has outperformed SOL by a large magnitude when both have been selected to be the blockchains supported by Instagram. Only Polygon NFTs will be on the Marketplace for the time being, which may in turn give a higher premium to NFTs minted on Polygon. NFT creators will thus be more keen to mint on Polygon than on other blockchains since Polygon NFTs now can be visible on another platform that may have massive viewership. Meta has the budget, resources and ability to promote this marketplace should they want to, as they already have a success story in Facebook. By being on both the Marketplace and also Instagram gives Polygon access to customer bases on both sides, which is like having his cake and eating it - no wonder Polygon has pumped on this news.
According to Markus Thielen, head of research and strategy at crypto services provider Matrixport, MATIC's rally could have legs, as Meta has said that it does not intend to charge fees to create or sell NFTs until 2024. To quote Thielen as saying,
"Polygon's MATIC could be a core long position here as Meta is serious about luring TikTok influencers away and becoming more active on its Instagram platform. Pledging to take zero commission on sales – contrary to Apple's 30% cut on all NFT sales on the App store – is a key selling point which will give Polygon an edge.”
MATIC Prints Golden Cross
After the Meta news erupted, the MATIC/USD daily price chart printed what analysts call a golden cross, which is a bullish crossover formation. A golden cross happens when the 50-day simple moving average (SMA) crosses above the 200-day SMA. This crossover signals that the most recent average price is higher than the long-term average price, which is a positive trajectory that indicates the consistent progression of an uptrend.
Even though MATIC’s price has retreated due to the broad crypto market crash caused by the FTX insolvency rumours, MATIC has remained as one of the strongest cryptos, pulling back to only $0.90 and bouncing back higher very quickly. The price of $0.90 is still higher than the golden cross price level of around $0.80, which is an area of very strong support. This again has proven that MATIC is on an uptrend that even a major market bloodbath is not able to reverse.
It may be a good idea for investors who have not bought MATIC during the bear market to use this pullback as a golden opportunity to start accumulating. You will be buying at a much more attractive level than the people who have rushed in to chase up the price of MATIC to $1.30 just a couple of days ago. Even if you had bought at a higher level, it should be alright as long as you are not making highly-leveraged bets as the onchain metrics and news flow for Polygon has continued to improve despite the bear market and market pullback.
Network Growth Exploded Post Instagram News
Post the Meta news, investors have rushed to create new MATIC wallets, which caused the highest surge in network growth since the 2021 bull market. Should this trend continue, it bodes well for the future price of MATIC as this means a consistent flow of new users being onboarded, a sign of steady adoption.
Other Good News Keep Coming for Polygon
Not only has Meta given a vote of confidence to Polygon, even investment banking giant JPMorgan, together with Singapore’s central bank MAS, has also successfully executed its first ever decentralized finance trade over the Polygon blockchain in early November, proving that faith in Polygon has extended to traditional financial firms and even regulators. The Singapore central bank has been infamous for being stringent on blockchain and crypto projects and thus, their usage of Polygon could be seen as a passive way of endorsing the blockchain. What better endorsement can a crypto get than to be endorsed by its competitors like banks and central banks? With developments like this, the Instagram support could just be one of many more exciting adoption news for Polygon in time to come.