Polygon (MATIC) Sinks Below $0.5 in Broad Market Wipeout: Can It Rebound?

• Polygon (MATIC) is back in the red.
• The price dip follows a broad market correction.
• The asset may still have some room to fall before reversing.

MATIC, the native token of the Polygon PoS blockchain , shot back into the spotlight over the past week amid a blistering 30% rally . While the rally had hinted at the beginning of a massive recovery after months in a rut, observers have been given pause for thought as the asset’s price has now relinquished most of its gains and retreated below a key psychological level.

Where will MATIC likely go from here?

Polygon (MATIC) Tanks 11%

Polygon’s MATIC is back in the red. The asset has again retreated below $0.5 to trade near the $0.45 price point at the time of writing, representing an over 11% decline in the past 24 hours per CoinMarketCap data .

MATIC’s price correction follows a broader market correction that has seen Bitcoin (BTC) and Ethereum (ETH) posting 5.6% and 7.9% losses over the past 24 hours, with BTC again trading below the $60,000 price point at the time of writing. 

In conversation with DailyCoin, CoinShares’ Head of Research, James Butterfill, attributed the recent market correction to hypersensitivity to monetary policy.

“The markets are hyper sensitive [sic] to monetary policy so it is likely the stronger than expected durable goods orders data likely played into this minor correction. Potentially the Telegram arrest has played a minor role, but I would classify the market as being rangebound covering a wide range over the last few weeks due to the hypersensitivity around FED rates,” he wrote.

Regardless of the catalyst, CoinGlass data suggests that over $330 million worth of crypto positions have been liquidated in the wipeout.

Is a Polygon (MATIC) Rebound Likely?

Following the recent market correction, MATIC’s price now appears to be moving to retest the trend line of its recently broken months-long downtrend, which may suggest more room to the downside. Before this retest, however, the asset could find support around the $0.43 price point, which had previously served as resistance. 

MATIC/USDT daily candle chart
Source: TradingView

MATIC’s chances of rebound will likely depend on how its price reacts at these levels.

From a fundamental perspective, the asset may have some tailwinds in the short term, with the highly anticipated MATIC to POL upgrade scheduled for September 4 . Polygon developers have tipped to upgrade to transform MATIC into a hyperproductive token that allows holders to earn rewards across multiple blockchains.

Still, according to CoinShares’ James Butterfill, investors also need to watch out for changes in the broader macroeconomic environment. The analyst tipped data expected in the coming weeks to significantly impact market performance.

“Many are focussing [sic] on the payroll data next Friday as the next major economic release likely to influence US policy, alongside the SPI data on the 11th September, just prior to the 18th September likely interest rate cut. The big debate currently is if the FED will do 25 basis points or 50bp [sic] in September, we suspect following weaker than expected employment data that the market begins pricing 50bp, which is likely to be very supportive for Bitcoin prices.”

On the Flipside 

• It is typically normal for assets to have price corrections after extended rallies as traders take profit.

Why This Matters

MATIC’s price has largely underperformed the broader crypto market over the past year, significantly impacting investor interest. Continuing this downturn could paint a worrying picture of the network’s future.

Read this for more on Polygon (MATIC):
Polygon (MATIC) Reclaims Top 20 Crypto Spot in Parabolic Run

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