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Polygon (MATIC) and Shiba Inu (SHIB) Show Suspiciously Similar Patterns

Thu, 06/08/2023 - 17:00
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Arman Shirinyan
Shiba Inu and Matic show surprisingly similar performance
Polygon (MATIC) and Shiba Inu (SHIB) Show Suspiciously Similar Patterns
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Polygon (MATIC) and Shiba Inu (SHIB) are demonstrating remarkably similar trading patterns. Both of these cryptocurrencies have hit their respective fundamental support levels, $0.76 for MATIC and $.0000079 for SHIB, sparking curiosity among investors and analysts alike.

Adding to this parallelism is the technical signal known as the "death cross," a bearish indicator that occurs when a short-term moving average crosses below a long-term moving average. Both MATIC and SHIB experienced this dreaded phenomenon recently, and their relative strength index (RSI) has dipped below 30, indicating that the assets might be oversold.

MATIC chart
Source: TradingView

However, despite these shared technical patterns, the two digital assets diverge fundamentally. Polygon, known for its scalability solutions for Ethereum, is showing impressive growth. The project continues to announce new partnerships and integrations, thereby contributing to its utility and adoption. Recently, it launched a $100 million fund for online gaming in collaboration with community gaming. This kind of progressive development reinforces the positive long-term perspective for MATIC, despite its current bearish price action.

On the other hand, Shiba Inu, a meme token that gained fame as the "Dogecoin killer," lacks such concrete fundamentals. SHIB's growth seems to be primarily driven by social media buzz and the whims of retail traders rather than intrinsic value or utility. Thus, its current price decline might lack the cushion of fundamental support that Polygon possesses.

Cardano hits important support

Cardano (ADA), a top-10 digital asset, continues its downward trajectory, hitting $0.32 in recent trading sessions. This steep decline follows the recent concerns that the U.S. Securities and Exchange Commission (SEC) may consider Cardano as a security, which surfaced after ADA's inclusion in the SEC's complaint against Coinbase.

As the markets digested the news, investors took note and acted, leading to an accelerated sell-off that has seen Cardano plunge significantly. However, amid the gloomy outlook, potential bounce points have been identified that could trigger a price reversal.

The first significant bounce point is around $0.3. This is a price level at which ADA reversed after the major correction in March and has since been considered a critical support zone. If Cardano can maintain this level, there is a chance for a market turnaround.

Furthermore, the relative strength index (RSI), a popular momentum indicator, is suggesting that ADA may soon be due for a bounce. Currently standing at 26, the RSI is edging closer to the oversold zone (below 30). Historically, when the RSI dips into this zone, it often signals that the asset is being oversold and could be due for a price correction or a bounce.

$500 million gone from market

In a sweeping market downturn, approximately $500 million have been closed on the cryptocurrency market, driven largely by concerns stemming from regulatory pressures by the U.S. Securities and Exchange Commission (SEC). The markets are facing a significant correction as investors grapple with the SEC's unpredictability and its active enforcement stance against various cryptocurrency exchanges.

This massive closure is emblematic of the increasing uncertainty pervading the crypto market, particularly due to the SEC's more assertive approach toward digital assets and cryptocurrencies. The change in the regulator's stance, marked by the appointment of Gary Gensler as SEC chairman, has spurred a wave of apprehension among investors.

Gensler, known for his deep understanding of the crypto industry and an advocate for its potential, has nonetheless proven to be a tough watchdog. He has been pushing for comprehensive regulatory frameworks to encompass digital assets, raising concerns over the potential for increased scrutiny and stricter regulations.

One of the triggers for the recent market correction is the SEC's latest legal move against prominent crypto exchange Coinbase. In a surprise announcement, the SEC considered several digital assets, including top-10 coin Cardano (ADA), as securities, which could potentially lead to tighter regulations. This news sparked widespread anxiety, prompting a massive sell-off on the crypto market and contributing to a market-wide correction.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.