Polygon Reaches Level That Last Triggered 275% MATIC Price Rally – Will History Repeat Itself?

polygon (MATIC) prices reversed to the upside on May 10 after testing $0.794 as its interim support, thus gaining as much as 25% to $0.99.

The rally came a day after the coin plunged more than 17% to $0.787, its lowest level since July 2021. global market crash Dominated by the Fed’s hawkish policies.

MATIC price rebounds after five days of continuous decline, attracting buyers at the same support level as before Before the 275% bull market last year.

MATIC/USD weekly price chart. Source: TradingView

Previously retested the $0.787 level and the 0.786 Fibonacci retracement chart (near $0.61) in July 2021 – from a $0.002 swing low to a $2.86 swing high – followed by MATIC rises to new all-time high $3 until December 2021.

Therefore, after bouncing off the same support confluence, MATIC/USD could experience a similarly sharp upside retracement in the coming weeks.

MATIC Fundamentals: Past and Present

However, between July 2021 and May 2022, market fundamentals have changed considerably, which may affect the behavior of MATIC traders.

For example, MATIC’s price surge occurred last year due to increased demand for Layer 2 solutions due to Ethereum’s soaring gas and transaction costs.

As a result, popular decentralized finance (DeFI) applications, including decentralized exchange SushiSwap (sushi), liquidity service curve (CRV) and lending platform Aave (ghost), expanding their business in the Polygon chain.

The total value locked in the Polygon liquidity pool. Source: Defi Llama

But 2022 will be a bad year for cryptocurrencies.Fed’s Decided to raise interest rates That was followed by a shrinking of its $9 trillion balance sheet, prompting investors to reduce exposure to riskier assets. Unfortunately, the prospect of excess cash leaving the market has hurt MATIC, with year-to-date returns on paper nearly 65% ​​below zero as of May 10.

Unfortunately, the prospect of excess cash leaving the market has hurt MATIC, with year-to-date returns on paper nearly 65% ​​below zero as of May 10.

related: 10-Month BTC Price Low Triggers $1 Billion Liquidations as Bitcoin Eyes $35,000 CME Futures Gap

“It’s a safe haven for all asset classes, including cryptocurrencies,” said Daniel Ives, a strategist at Wedbush Securities. Tell The FT added that digital asset investors “have nowhere to hide.” He added:

“Some investors are playing cryptocurrency like a hedge against inflation, but it’s trading like the Siamese twins of the Nasdaq.”

A silver lining in the chaos: Meta

On May 9, Polygon CEO Ryan Watt Announce They are working with Meta to create a non-fungible token (NFT) platform for Facebook and Instagram.

Meta CEO Mark Zuckerberg also comfirmed They’ve been “testing digital collectibles for creators and collectors to showcase NFTs on Instagram,” adding that a similar feature could be coming to Facebook soon. Hype can help MATIC form a strong price floor.

But from a technical standpoint, MATIC is likely to continue bearish to $0.615 in May.

MATIC/USD weekly price chart. Source: TradingView

Meanwhile, bullish confirmation seems unlikely unless the coin reclaims its 50-week exponential moving average (50-week EMA; red wave) as support near $1.37.

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