The Polygon price declined to a key support level as cryptocurrency prices tumbled. MATIC declined to $1.0853, which was the lowest level since September 7. It has fallen by more than 30% from its highest level this week.
MATIC has not been left behind
Cryptocurrency prices are in a deep sell-off as investors remain concerned about several things. First, there are worries about the Decentralized Finance (DeFi) industry. In the past few weeks, many regulators have voiced concerns about this fast-growing industry.
Together with stablecoins, the industry could soon see more regulations in the near term. Additionally, most DeFi platforms built on Polygon have seen a sharp decline in their total value locked (TVL).
Data compiled by DeFi Llama shows that these DeFi platforms have a TVL of more than $$4.15 billion, which is substantially lower than the all-time high of more than $10 billion. The biggest DeFi platforms in its ecosystem are Aave, QuickSwap, Curve, and Balancer.
Second, there are fears of contagion as Evergrande stares at bankruptcy. The giant Chinese conglomerate has more than $300 billion in debt. Some of these funds are coming due today while others are coming due on Thursday. It has also hired restructuring experts as it faces an existential crisis.
Therefore, a collapse of this company will have major impacts globally. Locally, in China, the collapse will affect its banking partners, suppliers, employees, and ordinary individuals. It will also have an impact on the real estate sector, which accounts to the biggest market share of the economy. Globally, it will lead to so-called contagion risks.
Third, the Polygon price has declined as investors wait for the upcoming Federal Reserve interest rate decision. The bank is expected to leave interest rates unchanged and provide signals about quantitative easing. A highly hawkish Fed will be negative for Polygon and other cryptocurrencies.
Polygon price forecast
The daily chart shows that the MATIC price declined to a low of $1.0853. This was a notable level since it was the lowest level since early this month. As such, the price formed a double-bottom pattern whose top is at $1.4930. It also moved below the 25-day moving average while the Relative Strength Index (RSI) declined to a low of 40.
Therefore, while the situation seems bearish, the double-bottom pattern points to a significant bounce in the near term. This view will be invalidated if the price moves below today’s low at $1.0850.