• The token that powers Ethereum scaling solution Polygon’s sidechain MATIC has surged in price, gaining over 44% this year.
• The rally has been driven by a combination of optimism around the project’s outlook and a broad rally in crypto prices.
• A break above the 38.6% Fibonacci retracement back from the 2022 lows could open the door to a push towards the 50% retracement around $1.62 and to the March 2022 high close to $1.75.

The cryptocurrency token that powers Ethereum scaling solution Polygon’s sidechain MATIC has been on an absolute tear in recent weeks, gaining over 44% this year. After having been stuck in a $0.92-$1.05 range for the last few weeks, MATIC surged as high as the $1.12s on Thursday, gaining over 13% on the day, though the rally has since eased off a little on Friday, with the cryptocurrency now trading back just to the south of the $1.10 level once again.

This surge has been driven by a combination of optimism around the project’s outlook and a broad rally in crypto prices. This month’s upside in crypto prices is being driven by a combination of easing financial conditions as US inflation and growth slow, leading to more dovish expectations for Fed tightening in the coming quarters, as well as growing signs (both technical and on-chain) that the bear market in crypto might now be over.

Polygon’s success has been further bolstered by the blockchain project having secured massive partnerships in 2022, such as its acceptance into the Disney accelerator program. These developments have provided a strong foundation for the cryptocurrency to build on and consequently have pushed the price of MATIC to new heights.

The latest surge should open the door for Polygon to be able to test its early November 2022 highs in the $1.30 area in the coming weeks. This resistance level roughly also coincides with the 38.6% Fibonacci retracement back from the 2022 lows under $0.32 to the end of 2021 record highs close to $3.0. A break above here would likely open the door to a push towards the 50% retracement around $1.62 and to the March 2022 high close to $1.75.

Overall, Polygon’s success has been indicative of an improving risk sentiment in the cryptocurrency space, with its strong partnerships and successful scaling solution providing the basis for the cryptocurrency’s current surge. It remains to be seen if the cryptocurrency can break through the resistance levels and move to new heights, but if it does, it could be the start of a new bull rally in the crypto space.