Toncoin (TON) Struggles Continue, Here’s Why It’s a Buy
beincrypto.com 27 August 2024 08:50, UTC The value of Toncoin (TON) plunged after Telegram CEO Pavel Durov was arrested on August 24. Currently trading at $5.38, TON has seen a 9% decline in price.
Despite the sell-off and profit-taking, an important on-chain metric has flashed a buy signal, suggesting a possible rebound.
Toncoin Presents Dip for Interested Traders
Toncoin’s (TON) MVRV ratios, analyzed across different moving averages, suggest it could be a strategic time to buy the altcoin. Data from Santiment shows that the token’s 7-day and 30-day MVRV ratios currently stand at -5.71% and -9.10%, respectively.
The MVRV metric compares an asset’s current market price to the average price of its circulating tokens. An MVRV ratio below zero indicates undervaluation, meaning the asset is trading below the average acquisition cost of its circulating tokens.
Historically, a negative MVRV ratio signals a buying opportunity, allowing market participants to acquire assets at a lower price with the expectation of selling at a higher value later.
Additionally, TON’s derivatives market shows resilience despite the recent challenges. Rising futures open interest and a positive funding rate across exchanges reflect steady confidence among traders.
Currently, TON’s futures open interest stands at $345 million, up 46% since Durov’s arrest. Futures open interest measures the total number of unsettled contracts, and an increase indicates growing participation from traders opening new positions.
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Moreover, TON’s positive funding rates suggest increasing demand for long positions. Despite the recent price drop, traders continue to favor buying the asset. The latest data shows a funding rate of 0.0074%, indicating a majority of traders anticipate a price rally over a decline.
TON Price Prediction: Bearish Sentiment Remains in the Spot Market
TON’s spot traders have turned increasingly bearish since Durov’s arrest. The token’s technical indicators highlight a surge in selling pressure, overshadowing buying activity.
For instance, TON’s Directional Movement Index (DMI) shows the positive directional indicator (+DI) below the negative directional indicator (-DI), signaling a strong downtrend and intensified selling pressure.
Moreover, the token’s Relative Strength Index (RSI) underscores the bearish momentum. Since the arrest, TON’s RSI has dropped from a neutral 50 to 36.98, nearing the oversold zone, indicating elevated selling activity.
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If selling pressure persists, TON’s value could drop to $4.73. Conversely, a bullish shift might drive the price up to $5.47.
