Polygon (MATIC) has surged past the $1 level for the first time since May, outperforming the rest of the crypto market. This analysis suggests that MATIC could rally another 70% if it maintains its bullish momentum. However, there are also risks of a pullback if the support levels fail. Read on to learn more about Polygon’s price action, fundamentals, and outlook.
Polygon (MATIC), the native token of the Polygon network, a scalable and interoperable blockchain platform, has shown remarkable strength in the past week, breaking above the $1 level for the first time since May. While most crypto markets have been under pressure from regulatory uncertainty, tax fears, and profit-taking, Polygon has defied the odds and rallied more than 30% in the last seven days.
At the time of writing, MATIC is trading at $0.99, up 8.5% in the last 24 hours, and has a market cap of $6.4 billion, making it the 12th largest cryptocurrency by market value. Polygon has also overtaken Tron (TRX) in the rankings and is closing in on Stellar (XLM) and Terra (LUNA).
Technical analysis: MATIC breaks out of symmetrical triangle
The recent price surge of MATIC can be attributed to a strong technical breakout from a symmetrical triangle pattern that has been forming since June. A symmetrical triangle is a consolidation pattern that indicates a period of indecision before a breakout in either direction. The breakout usually occurs in the direction of the previous trend, which, in this case, was bullish.
According to renowned cryptocurrency analyst Ali Martinez, if Polygon manages to achieve a sustained weekly candlestick close above the $0.96 mark, it could pave the way for a significant upward move, potentially propelling MATIC towards the $1.73 price level. This would represent a 70% increase from the current price and a new all-time high for MATIC.
Martinez based his analysis on the height of the symmetrical triangle, which is measured by drawing a vertical line from the highest point to the lowest point of the pattern. This line is then projected from the breakout point, which in this case was around $0.96, to obtain the target price.
However, Martinez also cautioned that the breakout is not confirmed yet and that MATIC could face some resistance at the $1.15 and $1.52 levels, which coincide with the 78.6% and 100% Fibonacci retracement levels, respectively. On the flip side, if MATIC fails to sustain its bullish momentum, it could face a reversal and fall back to the symmetrical triangle’s lower support levels, around $0.42 and $0.06, respectively. These levels correspond to the 23.6% and 0% Fibonacci retracement levels, respectively.
As a precautionary measure, Martinez advised implementing a stop-loss strategy below $0.55, which is the 38.2% Fibonacci retracement level and a key support level for MATIC.
Fundamental analysis: The driving forces behind MATIC
Some positive fundamental factors, such as the growth of the Polygon network, the accumulation of MATIC by large holders, and the endorsement of MATIC by billionaire Mark Cuban, also support the technical breakout of MATIC.
The Polygon network has seen a steady increase in its user base, transaction volume, and total value locked (TVL) in the past year. According to Polygon’s official website, the network currently has over 3,000 decentralized applications (DApps), 350 million transactions, and 13.5 million unique users.
The TVL on Polygon measures the amount of assets locked in smart contracts on the network, has also grown from $671 million at the beginning of the year to $1.53 billion as of December 26, 2023, according to DeFi Llama.
Another bullish factor for MATIC is the accumulation of the token by large holders, often referred to as whale addresses. According to data from Santiment, addresses holding between 1 million and 10 million MATIC have increased their holdings by 55 million MATIC tokens, equivalent to over $44.5 million, reaching a total of 930.97 million MATIC. This indicates that these whales are confident in the long-term potential of MATIC and are buying the dip. Interestingly, this accumulation coincided with a correction in the MATIC price, and it concluded as the altcoin rebounded from $0.765.
One of the most notable MATIC whales is Mark Cuban, the billionaire owner of the Dallas Mavericks and a prominent investor in the crypto space.
Cuban has been vocal about his support for Polygon and MATIC and has revealed that he holds a substantial amount of the token in his portfolio. He has also integrated Polygon with his NFT platform, Lazy.com, which allows users to display their NFT collections easily. Recently, Cuban moved a large number of his MATIC holdings to crypto exchange Coinbase, which sparked some speculation that he might be planning to sell some of his MATIC or use it for other purposes.
Polygon’s outlook and potential challenges
Polygon has proven itself to be one of the most innovative and successful projects in the crypto space, with its scalable and interoperable solution for Ethereum and other blockchains.
Polygon has also attracted a loyal and growing community of users, developers, and investors who believe in its vision and potential. Polygon’s native token, MATIC, has reflected this success and shown remarkable resilience and strength in a challenging market environment.
Polygon is also vulnerable to security breaches and attacks, as any blockchain project is. Polygon has experienced some incidents in the past, such as the exploit of the Poly Network bridge, which resulted in the loss of $611 million worth of assets, and the attack on the SafeDollar stablecoin protocol, which caused the token’s price to drop to zero. The blockchain platform will need to enhance its security and reliability and protect its users and assets to maintain its trust and reputation.
Disclaimer: The analysis provided is based on current market conditions and aims to provide objective insights into possible price movements. It is important to conduct further research and analysis before making any investment decisions. Coinscreed and its affiliates are not liable for any damage or loss.