The advance in scaling system Polygon's native cryptocurrency MATIC has accelerated in the wake of positive news and bullish chart patterns.
MATIC has rallied 30% in two days, reaching a six-month high of $1.15 on Friday, according to CoinDesk data. The climb has lifted the cryptocurrency's cumulative gain since the end of June to 270%.
The latest leg higher could be attributed to Web2 giant Meta's decision to launch a toolkit allowing users of social media platform Instagram to mint and sell Polygon-powered non-fungible tokens (NFT), or digital collectibles. Polygon is the first partner that Meta has chosen for the new feature.
"Creators will soon be able to make their own digital collectibles on Instagram and sell them to fans, both on and off Instagram," Meta announced Wednesday. "They’ll have an end-to-end toolkit – from creation (starting on the Polygon blockchain) and showcasing to selling."
On the same day, investment banking giant JPMorgan successfully executed its first decentralized finance trade over Polygon.
MATIC's rally since then suggests that despite lingering concerns about the global economy, investors are ready to snap up coins with positive fundamental developments that promise increased use cases.
The investor preference for news-driven trading is also evident from Thursday's 60% surge in AR, the native coin of the decentralized storage system Arweave after Meta said it would utilize the Web3 platform to archive digital collectibles.
According to Markus Thielen, head of research and strategy at crypto services provider Matrixport, MATIC's rally could have legs.
"Polygon's MATIC could be a core long position here as Meta (Facebook) is serious about luring TikTok influencers away and becoming more active on its Instagram platform," Thielen said. "Pledging to take zero commission on sales – contrary to Apple's 30% cut on all NFT sales on the App store – is a key selling point."
Meta said it won't charge fees to create or sell NFTs until 2024. However, 30% sales deductions will be applicable for the store fees. A core long position refers to a primary long-term bet that satisfies both fundamental and technical research criteria.
"The Meta announcement has brought attention to MATIC and [AR], and traders seem to be pairing long positions in these coins with short [sell] positions in perpetual futures tied to bitcoin," said Matthew Dibb, chief operating officer and co-founder of Stack Funds.
"Taking U.S. dollar exposure out of the trade seems to be the best thing to do right now," he said, drawing attention to the surging MATIC-BTC ratio, which has jumped to the highest point since January on Binance.
The MATIC/USD daily price chart shows the 50-day simple moving average (SMA) has crossed above the 200-day SMA, confirming what chart analysts call a golden crossover.
The pattern indicates the recent average price is higher than the long-term average price, a positive signal indicating the progression of an uptrend.
MATIC has toppled resistance at $1.055 (the Aug. 14 high), having breached a downtrend line last month. The next resistance is lined up at $1.24, the Feb. 24 low.
Open interest jumps
The dollar amount locked in futures tied to MATIC, also known as open interest, has nearly doubled from $209 million to $415 million in 24 hours, according to data source coinglass.com.
An increased open interest implies an influx of new money into the market. An uptick in open interest, along with an increase in the price of an underlying asset, is said to confirm an uptrend.
"Its a sign that traders are building new long positions," Matrixport's Thielen wrote in a note to clients.