Polygon reaches level that last time triggered a 275% MATIC price rally — Will history repeat?

Polygon (MATIC) worth reversed course to the upside on Could 10 after testing $0.794 as its interim assist, thus rising by as much as 25% to $0.99.

The rebound occurred a day after the token slumped over 17% to achieve $0.787, its lowest degree since July 2021, amid a world market crash led by the U.S. Federal Reserve’s hawkish insurance policies.

MATIC worth rebounded after present process 5 days of relentless declines, attracting consumers across the similar assist degree that had preceded a 275% bull run final 12 months.

MATIC/USD weekly worth chart. Supply: TradingView

A earlier retest of the $0.787-level in July 2021 and the 0.786 Fib line (close to $0.61) of the Fibonacci retracement graph — drawn from the $0.002-swing low to 2.86-swing excessive — adopted up with MATIC rising to its report excessive of $3 by December 2021.

Due to this fact, MATIC/USD would possibly endure the same, sharp upside retracement within the coming weeks after rebounding from the identical assist confluence.

MATIC fundamentals: Then and now

Nonetheless, lots has modified by way of market fundamentals between July 2021 and Could 2022 which will affect MATIC merchants’ conduct. 

As an illustration, MATIC’s worth growth occurred final 12 months as demand for layer-2 options elevated as a result of Ethereum’s skyrocketing gasoline and transaction prices.

Consequently, widespread decentralized finance (DeFI) functions, together with decentralized change SushiSwap (SUSHI), liquidity service Curve (CRV), and lending platform Aave (AAVE), expanded their operations within the Polygon chain.

The whole worth locked inside Polygon liquidity swimming pools. Supply: Defi Llama 

However 2022 has been a foul 12 months for cryptos. The Fed’s choice to hike rates of interest adopted by the unwinding of their $9 trillion steadiness sheet has prompted traders to cut back their exposures to riskier property. Sadly, the prospect of extra money leaving the market has harm MATIC, whose year-to-date paper returns had been practically 65% under zero as of Could 10.

Sadly, the prospect of extra money leaving the market has harm MATIC, whose year-to-date paper returns had been practically 65% under zero as of Could 10.

Associated: 10-month BTC worth lows spark $1B liquidation as Bitcoin eyes $35K CME futures hole

“This can be a risk-off throughout all asset lessons, together with crypto,” Daniel Ives, strategist at Wedbush Securities, advised the Monetary Occasions, including that digital asset traders have “nowhere to cover.” He added:

“Some traders are enjoying crypto like a hedge towards inflation, nevertheless it’s buying and selling just like the Nasdaq’s Siamese twin.”

Silver lining amid chaos: Meta

On Could 9, Polygon CEO Ryan Watt introduced that they’re partnering with Meta to create a nonfungible token (NFT) platform for Fb and Instagram.

Meta CEO Mark Zuckerberg additionally confirmed that they’ve been “testing digital collectibles for creators and collectors to showcase NFTs on Instagram,” including that comparable options would come to Fb quickly. The hype may assist MATIC type a powerful worth flooring.

However from a technical perspective, MATIC dangers bearish continuation towards $0.615 in Could.

MATIC/USD weekly worth chart. Supply: TradingView

In the meantime, a bullish affirmation seems much less more likely to seem except the token reclaims its 50-week exponential transferring common (50-week EMA; the purple wave) close to $1.37 as assist.

The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, it’s best to conduct your personal analysis when making a call.

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