The stock market lawsuits of June once again ignited the crypto securities debate. Altcoin giants like Solana and Cardano have also been caught on the SEC’s radar. Analysts at consulting firm Motley Fool say one more project could potentially be in trouble. It may be time to sell.
Three good reasons for crypto investors to worry about this altcoin
Polygon (MATIC), which was on the red list of analysts, was one of the hidden gems of the market. For the most part, it has closely aligned with Ethereum. Polygon is a scaling solution for Ethereum. Therefore, any future growth in Ethereum as a result of the Merge system upgrade also impacts Polygon.
But in 2023 it was a completely different story. The MATIC price has risen less than 1% to date. It may still be the best crypto by market cap, but there are plenty of reasons to worry right now…
Regulatory challenges
The biggest problem Polygon is facing right now is a potential regulatory enforcement action by the SEC. On June 6, the SEC designated Polygon as “unregistered securities.” Predictably, Polygon’s price instantly dropped more than 20% as investors panicked.
In the good news, with the July 13 victory of Ripple, the momentum for regulatory action against Polygon began to wane. In fact, MATIC posted a 20% increase in July with this latest development.
Intense competition
Polygon is also facing a tremendous increase in competition in its niche. As a Layer-2 scaling solution for Ethereum, it helps Ethereum run faster, cheaper and better. It acts as a secondary Blockchain sitting on Ethereum to process transactions faster.
The problem is, there are many other cryptocurrencies that offer the same services for Ethereum, including Optimism. All these scaling solutions use some kind of proprietary technology that is faster than Ethereum. Once upon a time, Polygon was the clear leader of this niche, but investors no longer think that’s the case. Polygon’s price has barely moved this year, while Optimism is up 66%.
A vague rebranding
At the beginning of the year, there were layoffs at Polygon Labs, the company behind Polygon. This 20% reduction in the workforce was followed by the SEC regulatory drama in June. All this led to the inevitable. This was a milestone in business strategy and a new token brand.
Just a week after the SEC news went live, Polygon began talking about its intention to become the “value layer of the Internet” as part of its transformation from Polygon to Polygon 2.0. Polygon says it will now rebrand MATIC as POL. cryptocoin.comIn this article, we have included what you need to know about POL.
1/ Polygon 2.0 is a concrete vision to build the Value Layer of the Internet, and expand Ethereum to Internet-scale.
It is a series of proposals for unlimited scalability & unified liquidity.
Why is this such a big deal? 🧵 pic.twitter.com/Jv7PvRfxFN
— Polygon (@0xPolygon) June 22, 2023
It’s hard to make sense of all this, but it seems Polygon wants to be a scaling solution on the network more than Ethereum. This will be good news if it leads to new growth opportunities. Or it will make things a lot more confusing.
last words
Polygon is currently turning a white page with a new token called POL. Motley Fool analyst Dominic Basulto interprets this move in two ways:
There are a number of issues revolving around Polygon, and it may be time to make a sale, especially if you are risk-averse. There was an explosion of competitive pressure followed by a potential SEC regulation challenge. At this time, I cannot offer a long-term bullish outlook for Polygon.
