Growing Risk of Economic Downturn
The past few months have been very challenging for the cryptocurrency market, with a significant downturn driven by hawkish central bank policies and the ongoing uncertainty surrounding the Ukraine crisis.
James Bullard, the President of the Federal Reserve Bank of St. Louis and a voting member of the Federal Open Market Committee, mentioned last Thursday that the U.S. government should adopt a more aggressive approach to tackle inflation by increasing interest rates by 75 basis points at its next meeting.
Though these rate hikes are aimed at controlling inflation and benefiting the economy, investors fear that an aggressive approach could push the economy into a recession. Risk-sensitive assets tend to suffer in these conditions, and we might witness new lows in both the stock and cryptocurrency markets in the coming weeks.
Polygon, like many cryptocurrencies, is correlated with the stock market, and any downtrend in the stock market is often mirrored in the crypto space. As recession fears dominate global markets, particularly in the U.S. and Europe, commodities are expected to remain the “best macro hedge,” according to Goldman Sachs. The firm has projected strong returns in the commodities sector, with an expected return of 34%, 30%, and 37% over the next three, six, and twelve months on the S&P GSCI Commodity Index. Industrial metals are expected to see the highest returns, followed by precious metals and energy.
Polygon’s Price: A Technical Perspective
Since late December 2021, Polygon (MATIC) has been in a downward trend, and last month, its price fell to levels not seen since April 2021. Currently, the price has found support above $0.50, but if it breaks below this level, we could see MATIC drop to $0.40 in the near term.
In the chart below, I have indicated the trendline, and as long as Polygon (MATIC) remains below this line, we cannot talk about a trend reversal. The cryptocurrency remains in the “SELL ZONE.”
Lykilstuðnings- og viðnámsstig fyrir marghyrning (MATIC)
The chart below (from January 2022) highlights the major support and resistance levels that traders should consider. Polygon (MATIC) is currently in a bearish phase, but if the price breaks above $0.80, it could signal a potential trend reversal, with the next target being around $1. The current support level is at $0.50, and if this level is breached, it would signal a “SELL” opportunity, potentially leading to a drop to $0.40. If the price falls below the strong support at $0.30, the next possible target could be $0.20.
Reddit’s Collaboration with Polygon: Launch of Collectible Avatars
In a recent announcement, social media giant Reddit revealed its partnership with Polygon to launch a series of blockchain-based NFT avatars that users can set as their profile pictures on the platform. Reddit explained:
“These new avatars will be available exclusively through a new dedicated marketplace, and they will come with licensing rights to use them both on and off Reddit. Creators will earn money for every avatar sold and will receive 50% of the royalties from secondary sales on open marketplaces.”
The announcement caused Polygon’s price to rise temporarily, but many surveys suggest that investors remain bearish on MATIC. Additionally, traders should bear in mind that the price of Polygon is closely tied to Bitcoin’s movements. If Bitcoin drops below $20,000 again, MATIC could fall to $0.40.
What Are Analysts and Experts Saying About MATIC?
Experts and analysts have raised concerns that a global recession may be imminent, which could push the price of Polygon (MATIC) lower in the near future. The U.S. Federal Reserve’s aggressive rate hikes, aimed at curbing inflation, tend to negatively affect risk-on assets like cryptocurrencies. While the hikes may ultimately stabilize the economy, investors fear that they could trigger a recession.
The third quarter of 2022 looks challenging for MATIC, and according to Mike Novogratz, CEO of Galaxy Digital, cryptocurrencies could experience a further decline of over 50% from current levels. Investor Jeffrey Gundlach has warned that Bitcoin could fall to $10,000, and if this happens, Polygon (MATIC) might drop below $0.20. Daniel Cheung, Co-founder of Pangea Fund, believes that July or August could be the most difficult months for cryptocurrencies, while Chris Burniske, a partner at Placeholder Ventures, predicts that the crypto market could find a bottom in the second half of 2022.
