PATNA (CoinChapter.com) — Polygon announced that its Proof-of-Stake (PoS) sidechain had undergone a hard fork on Jan 17. Developers implemented the Polygon hard fork at block height 38,189,056 at 09:00 am (UTC). However, MATIC price failed to capitalize on the Polygon upgrade news.
The Polygon upgrade aims to address sudden exponential spikes in gas fees on the Polygon PoS chain following the EIP-1559 upgrade.
In a Jan 12 blog post, developers stated that while it was normal to have high gas fees during demand surge, exponential spikes made transactions “on-chain gas dynamics” difficult.
The hard fork would help reduce gas fee spikes by changing the “BaseFeeChangeDenominator” from 8 to 16. Polygon developers stated the larger value would help smoothen the increase or decrease rate in baseFee for conditions for “when the gas exceeds or falls below the target gas limits in a block.“
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Additionally, the Polygon upgrade would reduce the sprint length from 64 to 16 blocks. Sprint length refers to the numbers of blocks a validator produces. The shorter length would help a single validator produce blocks continuously for a shorter time, reducing the validation time.
The shorted sprint length would also impact the finality of transaction by reducing the chain reorgs.
Interestingly, only 15 voters were involved in passing the latest Polygon hard fork. Each validator team on the blockchain was eligible for just one vote.
MATIC Price Capitulates To Bearish Pressure
Meanwhile, MATIC price failed to react to news of the Polygon upgrade going live. Bulls tried to help MATIC price make some gains, but the intense selling pressure spoiled the bulls’ plans. MATIC price dropped 4.3% to form a low of $0.99 on Jan 17.
However, the long wicks on both ends of recent daily candles suggest the Polygon traders remained undecided.
Furthermore, the token’s recent price action has helped MATIC’s 20-day EMA (red wave) poised to needle above its 200-day EMA (green wave), forming a bullish pattern called the golden cross. Traders usually consider the pattern an indicator of positive market sentiment and a buy signal.
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Hence, if buyers enter the market, MATIC price might end up targeting resistance near $1.05. Moreover, a break and hold above immediate resistance might help MATIC price rise to resistance near $1.13, which the Polygon token last reached in Nov 2022 for a brief period.
On the other hand, MATIC’s relative strength index has been in the overbought region since Jan 13, currently clocking at 74.22 on the daily charts. To recall, overbought RSI levels often forecast an impending bearish trend reversal, and so traders usually consider the pattern a sell signal.
If traders continue selling, MATIC price might drop to support near $0.97. Dropping below $1 might deal a psychological blow to Polygon traders, causing MATIC to breach below immediate support and fall 9% to reach $0.92 before recovering.
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