Polygon (MATIC) 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 a global market crash led 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 had preceded a 275% bull run last 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 with MATIC rising to its record high of $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 Ethereum’s skyrocketing 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 (AAVE), expanded their operations in the Polygon chain.But 2022 has been a bad year for cryptos. The Fed’s decision to hike interest rates followed 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.Related: 10-month BTC price lows spark $1B liquidation as Bitcoin eyes $35K CME futures gap”This is a risk-off across all asset classes, including crypto,” Daniel Ives, strategist at Wedbush Securities, told the Financial Times, adding that digital asset investors have “nowhere to hide.” He added:
Silver lining amid chaos: Meta
On May 9, Polygon CEO Ryan Watt announced that they are partnering with Meta to create a nonfungible token (NFT) platform for Facebook and Instagram. Meta CEO Mark Zuckerberg also confirmed that 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.Massive.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.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.