Polygon's MATIC token is seeing significant losses today, with the price down 5.9% over the past 24 hours to $0.7002. This has dragged Polygon's market cap down to $6.72 billion.

Trading volume stands at $234.31 million for MATIC in the past day, indicating decent market activity. However, the price has dropped 3.05% in just the last hour, extending its downwards trajectory.

Is This a Temporary Dip for Polygon?

Polygon's nearly 6% daily decline is disconcerting for bulls after its recent rally attempt. The price is back below the key $0.75 support level and risks further downside from here.

The negative momentum aligns with MATIC's 6.96% weekly drop. However, the monthly performance remains up 3.12%, indicating some lingering bullishness.

To stop the bleeding, Polygon needs to reclaim the $0.75-$0.80 zone to regain its upside momentum. Otherwise, we could see a retest of the June lows around $0.60. The extent of the pullback likely depends on Bitcoin's price action.

What's Causing the Weakness in Polygon?

A few factors are driving Polygon lower despite its strong long-term prospects. Firstly, the macro environment remains challenging with recession fears looming. This has dragged down speculative assets.

Additionally, as an Ethereum scaling solution, Polygon is correlated to ETH's price action, which has also been weak recently. Lingering fears around staking rewards reduction may also be weighing investor sentiment.

However, the project has many developments in the pipeline, like zk-Rollups, that could boost adoption long-term. The recent dip may present a buying opportunity for investors with a high risk tolerance. But in the near-term, volatility remains elevated amid the uncertain macro backdrop.

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