Toncoin experienced a significant value drop following the arrest of Pavel Durov, the CEO of Telegram, on August 24. The cryptocurrency, which is currently trading at $5.38, saw a 9% reduction in its price. Despite ongoing sales and profit-taking, on-chain data suggests a potential recovery. Various moving average analyses, including Toncoin’s Market Value to Realized Value (MVRV) ratios, indicate that this might be an opportune moment to buy the altcoin.
Why is Toncoin Dropping?
Data from Santiment reveals that Toncoin’s 7-day and 30-day MVRV ratios are currently -5.71% and -9.10%, respectively. The MVRV ratio compares an asset’s current market price to the average price of its circulating tokens. A negative MVRV ratio indicates undervaluation, suggesting that the asset is trading below its average acquisition cost, potentially signaling a buying opportunity.
Historically, a negative MVRV ratio has been seen as a buy signal, allowing investors to purchase assets at lower prices with expectations of future gains. Furthermore, despite recent struggles, Toncoin’s futures market has shown resilience.
What’s the Outlook for Toncoin’s Future?
Increased futures open interest and positive funding rates on exchanges indicate stable investor confidence. Currently, Toncoin’s futures open interest has surged by 46% since Durov’s arrest, reaching $345 million. This metric, which measures the number of ongoing contracts, suggests growing investor participation in opening new positions.
Toncoin’s spot investors have turned bearish following Durov’s arrest. Technical indicators reflect increased selling pressure, overshadowing buying activity. For instance, the Directional Movement Index (DMI) shows the positive directional indicator below the negative one, signaling a strong downtrend and heightened selling pressure.
Key Takeaways for Investors
Investor Insights
- Monitor MVRV ratios for potential buying opportunities.
- Keep an eye on futures open interest as an indicator of market confidence.
- Track technical indicators such as DMI and RSI for signs of market trends.
Additionally, Toncoin’s Relative Strength Index (RSI) has fallen from a neutral 50 to 36.98 since the arrest, nearing the oversold region, which further indicates rising selling activity. If this trend continues, Toncoin’s value could drop to $4.73. Conversely, a bullish reversal could see its price climbing to $5.47.
