Ethereum L2’s to keep an eye on in July

Polygon and Loopring are gaining upside momentum ahead of the Ethereum merge.

Key points:

• Polygon is trading sideways as the rest of the market drops, indicating buyers are still in the market.

• Loopring is making a V-shaped recovery, indicating that bulls are entering the market ahead of the Ethereum merge.

• Both Polygon and Loopring have strong odds for growth over and above hype around the Ethereum merge. 

Ethereum ETH/USD is in the process of an upgrade to Ethereum 2.0. According to tweets by Ethereum core developers, the move to Ethereum 2.0 is expected to be completed by August 2022. The implications will be positive not just for Ethereum but also for Ethereum layer-2 solutions. Among the cryptocurrencies that are expected to benefit immensely from Ethereum’s shift to a Proof-of-Stake chain are Polygon and Loopring.

Polygon prospects in 2022

After a rally between April 22nd and 24th, Polygon MATIC/USD bulls lost momentum. However, unlike most heavily bearish cryptocurrencies, Polygon is now directionless. 

Source: TradingView

This indicates that bulls still have a significant presence in the market, and can be linked to the upcoming Ethereum merge in August. If the merge comes and Ethereum gains upside momentum, Polygon, too, could see an increase in adoption. In such a case, the critical level to watch would be $0.618, a fundamental resistance level in the very short term. If this resistance is broken, and Polygon holds above it until the Ethereum merge, it could easily retest prices above its most recent highs in the short to medium term.

Besides the hype around the merge, there are strong underlying factors that could see Polygon keep gaining in value in the future. The most important one is that Polygon already has a strong ecosystem of Dapps running on top of it. This means that the Ethereum merge will only augment the number of projects running on the Polygon chain. This will add to the intrinsic value of MATIC tokens since MATIC is the native token to the Polygon ecosystem. 

The fact that Polygon is a deflationary token further adds to its potential to rally going into the future. 

Loopring prospects in 2022

Loopring LRC/USD is another Ethereum layer-2 solution that has the potential to rally once the Ethereum merge happens. Already its price action is showing potential anticipation by investors of a rally. 

For instance, after a dip between 25th and 27th, Loopring is making a rebound. When writing this article, Loopring was making a V-shaped recovery, and if the merge happens, Loopring could see a sustained rally that could extend throughout the year.

Source: TradingView

Besides such a potential short-term rally, there is much to look forward to in terms of LoopRing’s long-term price action. For context, Loopring already has a strong and fast-growing ecosystem of Ethereum tokens trading on top of it. Fast execution speeds and low costs make it one of the best in the market.