Toncoin (TON), currently ranked as the 10th-largest cryptocurrency by market cap, is showing mixed signals in the market. On the surface, Toncoin appears to be overvalued, with technical and on-chain metrics painting a bearish picture. However, despite recent underperformance, many Toncoin holders are quietly accumulating, hinting at the possibility of a future rebound. In this comprehensive analysis, we’ll explore Toncoin’s price action, on-chain metrics, and potential price movements in the near future.
Toncoin’s Overvaluation: A Red Flag for Investors?
At press time, Toncoin was trading around 14% lower than its late September high of $6.13. This dip is significant because it has also impacted the token’s market structure, which appears bearish on the daily chart. Despite being one of the top 10 cryptocurrencies by market cap, Toncoin has struggled to maintain upward momentum, with signs pointing to an overvalued status on the charts.
One key metric signaling overvaluation is the Network Value to Transaction (NVT) ratio, which has been trending upward since September. A high NVT ratio suggests that Toncoin’s market cap is inflated compared to the number of tokens being transacted on the network, indicating limited real-world usage relative to its valuation. This suggests that Toncoin may currently be priced higher than its actual utility justifies.
Moreover, the realized cap HODL waves, particularly the 90-180 day holding period, have begun to decline over the last three weeks. This is an indication that coins held for the medium term are being sold or moved, signaling distribution rather than accumulation. This movement of tokens implies that holders who have kept Toncoin for 90-180 days are cashing out, which could put additional selling pressure on the token’s price.
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Accumulation Amidst Bearish Signals
Despite these bearish signs, some recent on-chain data presents a more optimistic view. The netflows of Toncoin, which track the amount of TON moving in and out of exchanges, suggest that accumulation is taking place. In the past 24 hours, approximately 5.11 million TON were transferred out of exchanges, a bullish sign that indicates investors are holding onto their assets rather than selling them.
This trend contrasts with the broader movement over the past 30 days, which saw a netflow of -1.73 million TON, indicating more selling pressure during that period. The change in behavior over the last 24 hours could be an early sign of renewed optimism among Toncoin holders, as accumulation generally points to a belief in future price appreciation.
This accumulation, however, is not universal. Earlier in the week, some token inflows into exchanges were spotted, highlighting that selling pressure still exists. As a result, while there are signs of accumulation, the market remains cautious, and Toncoin’s next move is far from certain.
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Price Action and Technical Analysis
Toncoin’s price action on the 1-day chart supports the bearish outlook seen in the on-chain metrics. After failing to break past the critical resistance level of $6.13, Toncoin has struggled to gain upward momentum. The Relative Strength Index (RSI) has remained neutral, indicating a lack of strong momentum in either direction, while the On-Balance Volume (OBV) shows a lack of substantial demand for the token.
For Toncoin to establish a new uptrend, it will need to break through the resistance zone at $5.4, which is formed by a bearish order block. This is a critical level for the bulls to overcome, as failure to do so could see Toncoin continue its downward trajectory. With Bitcoin (BTC) showing strong performance and rallying by over 10% in the same period, Toncoin’s underperformance is particularly concerning.
The correlation matrix adds another layer to this story. Toncoin has had a relatively weak +0.26 correlation with Bitcoin over the past month, meaning that while Bitcoin has been rallying, Toncoin has failed to keep pace. Typically, when Bitcoin rises, many altcoins follow, but Toncoin’s inability to benefit from BTC’s surge is a red flag for traders and investors.
What’s Next for Toncoin?
Toncoin holders and potential investors are facing a crucial moment. On one hand, the recent accumulation suggests that some believe the token may be undervalued at its current price, and that a rebound could be on the horizon. On the other hand, the technical indicators and on-chain metrics point to a bearish outlook, with Toncoin struggling to break through key resistance levels.
For Toncoin to regain its bullish momentum, a few things need to happen. First, the token must break above the $6.13 resistance level and establish a new uptrend. Without this, the bearish market structure is likely to persist. Second, the token needs to show stronger correlation with Bitcoin and the broader crypto market, as this would indicate that Toncoin is capable of participating in market-wide rallies.
Additionally, any improvement in on-chain metrics, such as a decrease in the NVT ratio and an uptick in demand as indicated by the OBV, would be positive signals. Until then, investors should proceed with caution, as the risk of further downside remains.
Read more:Toncoin’s Price Plunge: Is a 15% Correction Imminent?
Final Thoughts
Toncoin’s current state is a tale of two narratives. On one side, accumulation is taking place, suggesting that some investors believe in the token’s future potential. On the other side, overvaluation, weak demand, and bearish technical signals highlight the challenges ahead. For now, Toncoin’s future hangs in the balance, with the next few weeks likely to determine whether the token can break out of its current slump or continue to underperform.
Traders and long-term holders should keep a close eye on key resistance levels, Bitcoin’s movements, and Toncoin’s on-chain metrics to make informed decisions. While the accumulation trend is promising, it remains to be seen whether it’s enough to counteract the token’s broader bearish momentum.
