Toncoin’s rally stalls: Healthy correction or deeper decline?

After an explosive 50% rally, Toncoin (TON) is facing increased selling pressure as profit takers step in. The sharp upswing, driven by news of Telegram founder Pavel Durov’s cleared travel restrictions, has now given way to uncertainty. Investors are debating whether this is a temporary pullback or the beginning of a prolonged downturn.

Profit-taking caps Toncoin’s gains

TON’s recent surge was fueled by market optimism surrounding Durov’s regained freedom. Previously entangled in legal issues in France, his travel restrictions had raised concerns about the future of the TON ecosystem. With these concerns alleviated, buyers rushed in, propelling TON to multi-month highs. However, profit-taking has set in, leading to a retracement that is testing key support levels.

Mixed technical signals: Key support in focus

Crypto analyst Crypto Patel has identified the $2.50-$2.70 range as a crucial support zone for TON. A decisive bounce from this area could confirm a continuation of the uptrend, with bullish targets extending to $8-$8.50 in the coming months. Conversely, a breakdown below $2.50 could signal a deeper correction, potentially testing lower levels.

On-chain data raises concerns

Despite the recent rally, on-chain metrics indicate potential headwinds for TON. Token inflation has increased from 0.33% in October to 0.40%, adding supply pressure to the market. Daily transactions have declined dramatically from nearly 20 million in September to just 2.15 million today.

Meanwhile, the total value locked (TVL) in TON’s DeFi ecosystem has dropped to $180 million from $800 million, signaling weakening engagement. STON.fi, TON’s primary decentralized exchange, reports daily trading volumes of just $7.1 million, lagging behind major DeFi platforms. 

Source: Tonstat

These factors raise concerns about TON’s ability to sustain its rally without fundamental growth.

Open interest spikes: Bullish leverage or liquidity risk?

Toncoin’s open interest (OI) in the derivatives market has more than doubled in just five days, rising from $80.75 million to $169.12 million as of March 16. While rising OI can indicate growing speculative interest, it also raises the risk of increased volatility. If leveraged positions unwind, a sharper decline could follow.

Source: Coinglass

Market Precedents Suggest Caution

Crypto markets are no strangers to the “buy the rumor, sell the news” phenomenon. Similar patterns have played out in the past, such as Cardano’s (ADA) surge linked to former President Trump’s crypto holdings, which was followed by a sharp reversal. Given this historical context, traders should remain cautious of a deeper correction once initial excitement fades.

Broader market conditions also warrant attention. The Crypto Fear and Greed Index currently sits at 22, indicating ongoing investor fear. While TON has outperformed, overall market sentiment remains fragile, which could influence its next move.

Key levels to watch: Buy the dip or stay on the sidelines?

TON’s pullback presents both opportunities and risks. Bulls may see it as a necessary consolidation before further gains, while skeptics point to weak fundamentals as a reason for caution.

For those considering an entry, monitoring support levels and overall market trends is essential. If TON stabilizes and regains momentum, another leg higher could be on the horizon. However, a failure to hold critical levels could open the door for further downside.

Upward pressure is evident but RSI being flat around the midline hints at momentum slowdown. Prices also touching the upper bollinger band  hints at overbought conditions. Key levels to watch on the upside are $3.661 and $3.768. On the downside, the levels to watch are $3.334 and $3.129. 

Source: Deriv MT5

Disclaimer:

The information contained within this article is for educational purposes only and is not intended as financial or investment advice. We recommend you do your own research before making any trading decisions.

This information is considered accurate and correct at the date of publication. Changes in circumstances after the time of publication may impact the accuracy of the information. No representation or warranty is given as to the accuracy or completeness of this information.

The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance.