Is Polygon Close to a Breakout? Crypto Analyst Benjamin Cowen Looks at State of Red Hot Ethereum Layer-2 Solution
Crypto analyst Benjamin Cowen is taking a look at the future prospects for Ethereum (ETH) scaling solution Polygon, whose native token MATIC has been on an upward trend in recent months.
In a new strategy session, Cowen compares the layer-2 protocol to the top two crypto assets, Bitcoin (BTC) and Ethereum, gauging how the altcoin might fare moving forward.
Cowen notes that while MATIC has been doing well against the US dollar lately, how it stacks up against BTC is also an important metric.
“We know that in order for us to really have a sustained breakout, we’d like to see Bitcoin ideally get back above the bull market support band. That would be the best-case scenario for MATIC if Bitcoin can get back above those levels.
Right now Bitcoin is still below the level and MATIC is still rallying, so who am I to say that it can’t rally above it?
But in order to have the best market conditions, we would like to see Bitcoin get… back to $53k or so. [That] would actually be quite ideal, and would set MATIC up for an ideal situation.”
At time of writing, Bitcoin is trading even for the day at $50,297.
Next up for the Polygon diagnosis is the MATIC/ETH trading pair, which Cowen believes is the ultimate barometer of the altcoin’s strength or weakness.
“Now the true test, as we all know, is what does it do against Ethereum? What if it bleeds against Ethereum? Does it bleed? Not really.
This is a pretty nice trend here. And you can see that most recently it started to break out again…
It does appear to be holding support at these levels [0.00036916 ETH, or about $1.62], it’s back above the bull market support band, and it’s also approaching the prior all-time high in terms of the MATIC/ETH valuation.
In order to get there, it would need to climb another 61% or 62% for a constant valuation of Ethereum. That would actually take the valuation of MATIC up to over $3.50 or so.”
Ethereum is currently up 2.75% on the day to $4,405.
Cowen concludes his analysis by saying that he likes MATIC’s overall prospects.
“I do think it is a good project and will probably continue to trend up for the duration of the cycle and move up a few more ranks the current market capitalization rankings of a lot of different altcoins.”
However, any rejection of Bitcoin itself would be bad news for altcoins in general.
“It looks like it’s breaking out against Bitcoin after holding support for a while. It looks like it’s breaking out some against Ethereum…
The main downside risk, [as] with all altcoins, is if Bitcoin gets rejected on its try to overcome the bull market support band.
If that happens and it comes back down, then there is a higher probability that most altcoins would bleed against the US dollar, and against Bitcoin, and even against Ethereum.”
MATIC is changing hands for $2.44 at time of writing. It’s up 4.41% for the day, and up 55.4% from its weekly low of $1.57 on December 3rd.
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