Polygon reaches level that before triggered a 275% MATIC cost rally — Will history repeat?

Polygon (MATIC) price reversed course towards the upside on May 10 after testing $.794 since it’s interim support, thus rising by as much as 25% to $.99.

The rebound happened each day following the token slumped over 17% to achieve $.787, its cheapest level since This summer 2021, among a global market crash brought through the U.S. Federal Reserve’s hawkish policies.

MATIC price rebounded after undergoing 5 days of relentless declines, attracting buyers round the same support level which had preceded a 275% bull run this past year.

MATIC/USD weekly cost chart. Source: TradingView

An earlier retest from the $.787-level in This summer 2021 and the .786 Fib line (near $.61) from the Fibonacci retracement graph — attracted in the $.002-swing low to two.86-swing high — adopted track of MATIC rising to the record high of $3 by December 2021.

Therefore, MATIC/USD might undergo an identical, sharp upside retracement within the coming days after rebounding in the same support confluence.

MATIC fundamentals: Now and then

However, a great deal has altered when it comes to market fundamentals between This summer 2021 and could 2022 that could influence MATIC traders’ behavior. 

For example, MATIC’s cost boom happened this past year as interest in layer-2 solutions elevated because of Ethereum’s skyrocketing gas and transaction costs.

Consequently, popular decentralized finance (DeFI) applications, including decentralized exchange SushiSwap (SUSHI), liquidity service Curve (CRV), and lending platform Aave (AAVE), expanded their operations within the Polygon chain.

The entire value locked inside Polygon liquidity pools. Source: Defi Llama 

But 2022 is a bad year for cryptos. The Fed’s decision to hike rates of interest adopted through the unwinding of the $9 trillion balance sheet has motivated investors to lower their exposures to riskier assets. Regrettably, the possibilities of excess cash departing the marketplace has hurt MATIC, whose year-to-date paper returns were nearly 65% below zero by May 10.

Regrettably, the possibilities of excess cash departing the marketplace has hurt MATIC, whose year-to-date paper returns were nearly 65% below zero by May 10.

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

“This can be a risk-off across all asset classes, including crypto,” Daniel Ives, strategist at Wedbush Securities, told the Financial Occasions, adding that digital asset investors have “nowhere to cover.” He added:

“Some investors are playing crypto just like a hedge against inflation, but it’s buying and selling such as the Nasdaq’s Siamese twin.”

Silver lining among chaos: Meta

On May 9, Polygon Chief executive officer Ryan Watt announced that they’re partnering with Meta to produce a nonfungible token (NFT) platform for Facebook and Instagram.

Meta Chief executive officer Mark Zuckerberg also confirmed that they’ve been “testing digital collectibles for creators and collectors to showcase NFTs on Instagram,” adding that similar features will come to Facebook soon. The hype may help MATIC form a powerful cost floor.

But theoretically speaking, MATIC risks bearish continuation toward $.615 in May.

MATIC/USD weekly cost chart. Source: TradingView

Meanwhile, a bullish confirmation looks less inclined to appear unless of course the token reclaims its 50-week exponential moving average (50-week EMA the red wave) near $1.37 as support.

The views and opinions expressed listed here are exclusively individuals from the author and don’t always reflect the views of Cointelegraph.com. Every investment and buying and selling move involves risk, you need to conduct your personal research when making the decision.

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