- TON’s Sharpe ratio has turned negative, indicating low rewards for holders.
- TON risks an 18% decline if the price fails to break the consolidation bullishly.
Tonmint [TON] has underperformed Bitcoin [BTC] and other altcoins in the past 30 days after a 5% price drop. At the time of writing, TON was trading at $5.28 as mild volatility hampered significant price moves.
A look at the Sharpe ratio shows that holders are currently receiving significantly low rewards. At the time of writing, this statistic was negative and at its lowest level in one month.
Source: CryptoQuant
A negative Sharpe ratio shows that the risk of holding Toncoin outweighs the reward. With TON failing to post significant gains, a predominantly low and negative Sharpe ratio could dampen interest in the token, causing further declines.
TON stagnates with low volatility
The one-day chart of TON shows that its price has fluctuated between $5 and $5.40 over the past two weeks. During this period, the Relative Strength Index (RSI) is below 50, indicating a lack of interest from buyers to support a breakout.
Source: Tradingview
At the time of writing, TON’s RSI stood at 47, indicating that sellers are more than buyers. The lack of buying activity paints a contrasting picture of the broader market crypto fear and greed index shows that retail interest in crypto assets is high.
The lack of a strong breakout for TON, both positive and negative, is also due to the low volatility, as seen in the shrinking Bollinger bands.
The token touched the upper band at $5.39 before encountering resistance. If the price breaks above, it could signal the start of an uptrend.
However, if Toncoin fails to break out of this consolidation phase, the price risks a steep 18% drop from the current price to the Fibonacci level of 1,618 ($4.28).
TON portfolios experiencing losses could be the catalyst behind such a decline. Data from IntoTheBlock shows that these wallets have increased by 29% to 63% in three weeks.
Source: IntoTheBlock
If these traders choose to minimize their losses, it could increase selling pressure and cause further declines.
TON blockchain shows signs of recovery
The TON blockchain saw a sharp increase in use at the end of September. However, since then the number of active users and transactions on the network has fallen sharply.
Read Toncoin’s [TON] Price forecast 2024–2025
Data from TokenTerminal shows a slight recovery. On October 20, the number of daily active users on TON increased from 567,000 to 792,000. The number of daily transactions also increased from 5 million to 5.7 million.
Source: TokenTerminal
An increase in network usage used to be a catalyst for growth. Therefore, if this recovery continues, it could renew the bullish sentiment surrounding Toncoin.
