Risk assets are on a swift downside move today, which means there may be potential opportunities for crypto traders to get into solid uptrend plays at better prices. Polygon (MATIC) arguably fits that description, so we’ll check it out to see if we can find areas of interest where traders may act.
The Federal Reserve shook up the markets this week as their willingness to raise interest rates/reduce their balance sheet appeared more aggressive than expected in their meeting minutes released yesterday. Bond yields and the U.S. dollar took off on the event, forcing lower the rest of the markets, especially higher risk assets like tech stocks and the crypto space.
The question now is whether or not this is just a dip in risk sentiment or the start of a longer-term reversal? We don’t know, but with layer-2 scaling solutions likely to get more attention in 2022 after seeing scaling issues with Ethereum and other layer-1 blockchains in 2021, Polygon (MATIC) comes to mind as a potential market that may draw in buyers during this overall dip in risk.
As we mentioned in our last post on Polygon (MATIC), the Polygon network is a layer-2 scaling solution for the Ethereum network and has been integrating new tech to speed up transactions, as well as make them more private. That story hasn’t changed in the last couple of months, so it’s likely the dip from all-time highs at $2.92 at the end of December has good odds of being a buying opportunity in an already well-established uptrend.
Looking at the four hour chart above, we can see that MATIC has been grinding higher since last Summer, but has taken a 25% dip since the start of the new year, now testing the rising 100 simple moving average. It’s not likely this will draw in major support, especially with more top tier economic updates from the U.S. that could shake up the global markets and U.S. dollar again.
Instead, we’ll be be holding out to see if we get a deeper dip in MATIC/USD to the area of potential strong support between $1.50 – $1.80. We can see that this area is a confluence of several technical arguments for support: a rising ‘lows’ pattern, rising 200 SMA, and a previous area of strong interest.
If that market retests this area and we see bullish reversal candles play out, then we’ll consider a potential swing (or longer-term) long position in MATIC/USD to play expectations that layer-2 networks could gain further adoption in 2022. Of course, broad risk sentiment is a big factor as well, so we’ll check out the picture there too before making a move.
What do you all think? Is MATIC a buy? Do you think layer-2 chains will gain further ground? Or will we see the crypto market dip further due to broader risk sentiment moves? Let me know in the comments section below!
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