Polygon () price reversed course to the upside on May 10 after testing $0.794 as its interim support, thus rising by up to 25% to $0.99.
The rebound occurred a day after the token slumped over 17% to reach $0.787, its lowest level since July 2021, amid aled by the U.S. Federal Reserve’s hawkish policies.
MATIC price rebounded after undergoing five days of relentless declines, attracting buyers around the same support level that hadlast year.
A previous retest of the $0.787-level in July 2021 and the 0.786 Fib line (near $0.61) of the Fibonacci retracement graph — drawn from the $0.002-swing low to 2.86-swing high — followed up withof $3 by December 2021.
Therefore, MATIC/USD might undergo a similar, sharp upside retracement in the coming weeks after rebounding from the same support confluence.
MATIC fundamentals: then and now
However, a lot has changed in terms of market fundamentals between July 2021 and May 2022 that may influence MATIC traders’ behavior.
For instance, MATIC’s price boom occurred last year as demand for layer-2 solutions increased due to.
As a result, popular decentralized finance (DeFI) applications, including decentralized exchange SushiSwap (), liquidity service Curve ( ), and lending platform Aave ( ), expanded their operations in the Polygon chain.
But 2022 has been a bad year for cryptos. The Fed’sfollowed by the unwinding of their $9 trillion balance sheet has prompted investors to reduce their exposures to riskier assets. Unfortunately, the prospect of excess cash leaving the market has hurt MATIC, whose year-to-date paper returns were nearly 65% below zero as of May 10.
Unfortunately, the prospect of excess cash leaving the market has hurt MATIC, whose year-to-date paper returns were nearly 65% below zero as of May 10.
«This is a risk-off across all asset classes, including crypto,” Daniel Ives, strategist at Wedbush Securities,the Financial Times, adding that digital asset investors have “nowhere to hide.” He added:
«Some investors are playing crypto like a hedge against inflation, but it’s trading like the Nasdaq’s Siamese twin.»
Silver lining amid chaos: Meta
On May 9, Polygon CEO Ryan Wattthat they are partnering with Meta to create a nonfungible token (NFT) platform for Facebook and Instagram.
Meta CEO Mark Zuckerberg alsothat they have been «testing digital collectibles for creators and collectors to showcase NFTs on Instagram,» adding that similar features would come to Facebook soon. The hype could help MATIC form a strong price floor.
— Michaël van de Poppe (@CryptoMichNL)
But from a technical perspective, MATIC risks bearish continuation toward $0.615 in May.
Meanwhile, a bullish confirmation looks less likely to appear unless the token reclaims its 50-week exponential moving average (50-week EMA; the red wave) near $1.37 as support.
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