Key Takeaways:
- Alameda Research could dump its MATIC stash
- Should Polygon traders be worried?
- MATIC also faced technical headwinds.
YEREVAN (CoinChapter.com) – Polygon (MATIC) could be dragged to the bottom following a contagion brought on by crypto exchange FTX and Alameda Research, a sister company founded by the FTX CEO Sam Bankman-Fried. According to the latest news, Alameda might dump its 2.9 million MATIC stash.
Polygon and Alameda, what’s going on?
According to the @Lookonchain channel on Twitter, Alameda, which provides liquidity for several DeFi platforms, transferred nearly 3 million MATIC tokens. Providing the wallet information, Lookonchain noted that MATIC investors should be aware of its affiliation with Alameda. In short, if the latter dumps the stash due to liquidity issues, a MATIC price depreciation might follow.
Moreover, the DeFi market is highly interconnected. Thus, if one trading company is in trouble, it could send ripples across the segment, causing a domino effect.
What happened to Alameda and FTX?
In detail, Alameda and FTX were responsible for one of the biggest crypto shake-ups since the Terra implosion. It was brought to light that Alameda rests largely on FTX token FTT funds, raising questions about the company’s potential insolvency.
Rival crypto exchange Binance stepped in and ‘offered to help.’ In the latest Binance-FTX saga plot twist, Binance agreed to acquire FTX, as the latter temporarily halted all withdrawals.
Meanwhile, Binance CEO Changpeng Zhao (CZ) tweeted that FTX had asked for Binance’s help. Allegedly, Binance and FTX reached a buyout agreement for an undisclosed amount. According to CZ, there was a “significant liquidity crunch” at the exchange, likely due to FTX investors’ recent bank run.
Also read: FTX token FTT Price tanks 40%, Amid Binance Controversy.
As the DeFi stability continues to devolve, Polygon’s MATIC token might face additional headwinds in bearish technicals.
MATIC Price to drop 90%?
The crypto market has suffered heavy losses year-to-date due to various factors, including the war in Ukraine, Bitcoin’s dependency on the stock market, and the Fed’s hawkish policies to curb the rising inflation. The latest FTX liquidity crunch was the icing on the cake.
But digital assets might have more to bleed, as the mentioned factors are still at play, and the Polygon token is no exception. MATIC/USD exchange rate stood at $0.95 on Nov 9, after dropping 25% in the previous two days.
Additionally, MATIC painted a rather grim ‘symmetrical triangle’ on the charts, which could slash another 90% off the token’s valuation. In short, a symmetrical triangle is a set of two converging trendlines with a similar slope. They connect the swing highs and lows and typically represent a consolidation period after a sharp move in either direction.
Moreover, the symmetrical triangle is a continuation pattern. It sets a target breakout/breakdown point equal to the maximal height of the setup.
Admittedly, MATIC followed the temporary recovery and broke the pattern’s resistance on Nov 4. Then retested the said line as support on Nov 8. However, should the token fall below the triangle’s lower trendline, it could drop another 90% and reach $0.09 before the end of 2022.
