Polygon’s MATIC swept off exchanges in large volumes, token eyes recovery

Ethereum scaling chain Polygon’s native token MATIC left exchanges in large volumes. This drove its exchange reserves down from 9.19% of the total supply in December to 8.56% on January 10. 

The Polygon chain announced the launch of Libre in a recent blog post; this could act as a catalyst for MATIC price recovery. 

Also read: Bitcoin ETF announcement hack reveals BTC price upside is likely capped

Polygon introduces Libre for global alternative investment funds

Polygon, the largest Ethereum scaling chain, introduced a new alternative investment infrastructure designed for asset managers and distributors. This product is called Libre and it is a dedicated chain built with Polygon’s Chain Development Kit (CDK). 

Polygon’s Libre has acquired legal and regulatory compliance and its objective is to help alternative investment management firms issue their own tokenized assets. The chain will further offer access to value-add services in the digital asset ecosystem, powering collateralized lending and automated rebalancing of separately managed accounts. 

Libre’s launch could catalyze MATIC price recovery as it is expected to boost the relevance of Polygon among market participants. 

MATIC could rally alongside ETH

MATIC price yielded nearly 2% gains on the day, amidst the false Bitcoin Spot ETF approval announcement from the Securities and Exchange Commission (SEC) and Ethereum’s climb above $2,300 on Binance. 

MATIC holds a 0.85 correlation with BTC and 0.91 with Ethereum, according to Macroaxis data. This implies a rally in Ethereum price could act as another catalyst for MATIC price. While the ETF approval announcement revealed that BTC gains are capped below $48,000, it pushed Ethereum price to a peak of $2,431 as of January 10. 

The SEC’s deadline for a decision on the Bitcoin Spot ETF is January 10. Ethereum’s reaction to the news could influence MATIC because of the high correlation between the two assets. 

Another catalyst supporting MATIC gains is its dwindling supply on exchanges. Between December 11 and January 10, MATIC reserves on exchanges dropped from 9.19% to 8.56% as the token flowed out of exchange wallets. This is typically considered a bullish sign for Polygon’s native asset as it reduces selling pressure on the token on exchange platforms. 

MATIC supply on exchanges. Source: Santiment.

At the time of writing, MATIC price is $0.8179 on Binance.