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Polygon reaches stage that final time triggered a 275% MATIC value rally — Will historical past repeat?

Polygon reaches stage that final time triggered a 275% MATIC value rally — Will historical past repeat? thumbnail
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Polygon (MATIC) value reversed course to the upside on May 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 succeed in $0.787, its lowest stage since July 2021, amid a international market crash led by the U.S. Federal Reserve’s hawkish insurance policies.

MATIC value rebounded after present process 5 days of relentless declines, attracting consumers across the similar assist stage that had preceded a 275% bull run final yr.

MATIC/USD weekly value chart. Source: 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 file excessive of $3 by December 2021.

Therefore, MATIC/USD would possibly bear an analogous, sharp upside retracement within the coming weeks after rebounding from the identical assist confluence.

MATIC fundamentals: Then and now

However, rather a lot has modified when it comes to market fundamentals between July 2021 and May 2022 that will affect MATIC merchants’ habits. 

For occasion, MATIC’s value growth occurred final yr as demand for layer-2 options elevated resulting from Ethereum’s skyrocketing gasoline and transaction prices.

As a outcome, fashionable decentralized finance (DeFI) purposes, together with decentralized trade SushiSwap (SUSHI), liquidity service Curve (CRV), and lending platform Aave (AAVE), expanded their operations within the Polygon chain.

The complete worth locked inside Polygon liquidity swimming pools. Source: Defi Llama 

But 2022 has been a foul yr for cryptos. The Fed’s determination to hike rates of interest adopted by the unwinding of their $9 trillion stability sheet has prompted traders to scale back their exposures to riskier property. Unfortunately, the prospect of extra money leaving the market has harm MATIC, whose year-to-date paper returns had been almost 65% under zero as of May 10.

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

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

“This is a risk-off throughout all asset lessons, together with crypto,” Daniel Ives, strategist at Wedbush Securities, instructed the Financial Times, 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 May 9, Polygon CEO Ryan Watt introduced that they’re partnering with Meta to create a nonfungible token (NFT) platform for Facebook 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 related options would come to Facebook quickly. The hype may assist MATIC kind a robust value flooring.

But from a technical perspective, MATIC dangers bearish continuation towards $0.615 in May.

MATIC/USD weekly value chart. Source: TradingView

Meanwhile, a bullish affirmation seems to be much less prone to seem until the token reclaims its 50-week exponential shifting 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 creator and don’t essentially mirror the views of Cryptonomie.eu. Every funding and buying and selling transfer entails danger, it’s best to conduct your individual analysis when making a call.

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