The MATIC price is sharply lower by 14.5%, to a critical support level this morning as investors brace for China’s Lehman moment. Polygon (MATIC) is witnessing heavy selling in early Asian trading on Tuesday as broad-based selling engulfs risk assets.
It appears that cryptocurrencies are not immune from the fate facing stock markets. Most top-ranked cryptos have suffered material losses over the last two days as the near-collapse of Chinese property developer Evergrande sends cash fleeing risk assets, and many are wondering if the fallout will echo the destruction of the US credit markets in 2008.
Evergrande’s troubles are by no means new, and the struggling builder’s bonds have been falling for weeks. However, there were hopes that the Chinese government would step in before contagion spread. Unfortunately, as yet, it has not happened, sending the Hang Seng to its lowest level in a year. This, in turn, saw US equities register their worst day in 11 months yesterday, triggering waves of selling in Crypto.
Bitcoin (BTC) is currently down 10% at $42,760, just above the crucial 200-day moving average at $41,822. BTC’s 200 DMA is possibly the most significant level to watch for Crypto traders today. If BTC fails to hold $41,822, it’s likely to encourage more selling and put considerable pressure on the MATIC price. Furthermore, Polygon faces its own test of crucial support this morning.
The daily chart shows the MATIC price has traded down to $1.0960, testing trendline support at $1.0800. So far, the trend is holding, and Polygon has bounced to $1.1400. Just below the trendline, the 200-day moving average at $1.0300 reinforces the considerable price support. If Polygon fails to hold above$1.0300 on a closing basis, I expect sellers to take control in the near term. This could push the price lower into the broad band of support between $0.5000-$0.7500. However, this relies on BTC breaking below the 200 DMA.
Above the market, the MATIC price sees resistance at the 100 DMA at $1.2470 and the 50-day at $1.3320. If Polygon climbs above, and more importantly, closes above the 100-day, the immediate bearish view becomes invalid.
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