Daily News | Stable Crypto Prices, Uncertain Credit Crunch Trigger, and Polygon's zkEVM Beta Launch

Crypto Daily Digest: Analysts Disagree on Credit Crunch Trigger, Crypto Prices Remain Stable Amidst TradFi Volatility

Good morning, traders! Hope you had a good weekend. Let’s seize this Monday relentlessly and make the most of it! 🚀

The persistent concerns over a possible recession have led to cautious trading on Monday, which saw a slight rise in US stock futures and a weakening of the dollar. The banking crisis has caused uncertainty in the markets, with investors in the bond market betting on a recession and rate cuts, while expectations of further interest rate hikes this year have decreased. Some analysts, however, believe that the pressure on lenders will not trigger a credit crunch and recession. Despite recent failures of some US regional lenders and the near-collapse of Credit Suisse, top US regulators have reassured investors about the overall soundness of the financial . Global authorities are also working to instill calm in the markets and reassure investors.

Meanwhile, financial markets are bracing for another week of volatility, as traders close out a turbulent month that has been dominated by concerns over US and European lenders. This has complicated central banks’ efforts to fight inflation. Traders are seeking haven assets, and the yen and Swiss franc have edged higher against the dollar, while the euro has remained relatively stable. The demand for haven assets has been driven by fears over the health of lenders and a possible US recession. Bond traders have adjusted their expectations for monetary policy, with bets that officials may cut interest rates as early as June, rather than raise them again in May.

Despite several significant economic events, such as an interest rate hike and increased scrutiny of the cryptocurrency industry, the prices of Bitcoin and Ether have remained fairly consistent. While bond values have declined as some investors flood in to protect their assets’ value, the prices of these cryptocurrencies have not been affected as much, implying the so-called “inflation hedge” narrative of Bitcoin may not be as popular among TradFi investors. Furthermore, Ripple (XRP) has experienced a 20% increase in the past seven days, while immutable X (IMX) has faced a 25% decline during the same period. Looking ahead, traders will closely monitor the release of the US’s quarterly GDP data and core personal consumption expenditure data this week.

Topic of the Day: Polygon Launches zkEVM Mainnet Beta, but Competition and Partnership Risks Loom

Polygon is set to launch its zkEVM mainnet beta on Monday, offering a solution for the Ethereum eco by performing off-chain computations on a secondary layer for faster and cheaper transactions, while prioritizing security. This new network supports the same code as Ethereum, enabling developers to easily onboard Ethereum applications without requiring significant modifications. In the near future, more developers are expected to express interest in integrating their platforms with the zkEVM.

Decentralized lending protocol, Aave, is considering deploying a minimum viable version of Aave version 3 on the Layer 2 network and issuing its GHO stablecoin on the zkEVM. Web3 game builder, Immutable, are also collaborating to launch a Layer 2 blockchain network called Immutable zkEVM.

While the launch of the zkEVM and potential partnerships could be beneficial for Polygon, there are potential downsides to consider. While increased adoption could drive up demand for the MATIC token, there is the possibility of increased competition as other Layer 2 solutions may challenge Polygon‘s market share. Additionally, if partnerships with Aave and Immutable do not go as planned, it could lead to investor disappointment and negatively impact the token’s price. The success of the zkEVM will depend on its ability to attract developers and users to the platform, requiring ongoing marketing and community-building efforts.

Polygon (MATIC) $1.10277 (-0.18%) - Neutral Outlook

Overview:

• Closest hourly support zone: 1.0932 - 1.0757
• Closest hourly resistance zone: 1.1045 - 1.1146
• Key Level: 1.0581 (Weekly High of May. 03 - 10, 2021)

MATIC has experienced a recovery on the weekly timeframe following a decline and rejection of the upper channel over the past three weeks. Currently, it is trading within the weekly golden zone, ranging from 1.1585 to 1.0619. This indicates that MATIC’s higher timeframe remains sluggishly bullish, as long as its rising structure remains intact.

If another red candle appears this week, it may rebound from the bottom red channel, which is situated between the weekly level of 1.0581 and the monthly level of 0.9471. On the 4H timeframe, MATIC has respected and bounced back from the weekly golden zone, and the RSI shows that momentum is gradually increasing.

In the short term, if MATIC breaks above the daily downward golden zone, which is between 1.1146 and 1.1045, it may face resistance at the edge of the weekly supply zone, which is 1.1355 and coincides with a daily downward channel. If MATIC manages to make a clean break and hold above the channel, the bullish trend is likely to continue, and the bulls may target the daily supply zone, ranging from 1.1985 to 1.2433.

However, if the breakout fails, MATIC may retest the weekly golden zone at 1.0619, and the bears may aim for the daily demand zone, ranging from 1.0160 to 0.9737.

Hourly Resistance zones

1. 1.1045 - 1.1146
2. 1.1355 - 1.1585
3. 1.1731 - 1.1910

Hourly Support zones

1. 1.0932 - 1.0757
2. 1.0682 - 1.0581
3. 1.0160 - 0.9737