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Toncoin, one of the best performing cryptocurrencies in 2024, has also been affected by the widespread bearish environment in the market in recent months. The price of the altcoin seems to be recovering well after an abrupt drop on Friday, October 26.
At the time of writing, Toncoin is valued at around $4.92, reflecting an increase of almost 3% in the past day. However, this one-day action has had minimal impact on the token’s performance in the weekly time frame. According to data from CoinGecko, TON price has fallen by almost 7% over the past week.
What does the decreasing Sharpe ratio mean?
In a recent Quicktake post on the CryptoQuant platform, an analyst with the pseudonym Darkfost explained the relevance of the ‘Sharpe Ratio’ metric to the price of cryptocurrency. According to the crypto expert, the Sharpe Ratio for Toncoin has fallen in recent weeks, indicating a period of reduced risk.
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The relevant metric here is the Sharpe Ratio, which assesses the risk-adjusted return of an investment. This indicator essentially measures how much profit an investment offers per unit of risk (where risk is quantified by volatility).
Typically, a rising Sharpe ratio indicates higher risk-adjusted performance. On the other hand, when this measure is in a downtrend, it implies that the coin is in a “lower risk zone” and profits become less important.
According to Darkfost, it appears that both volatility and risk for Toncoin are decreasing as the Sharpe Ratio continues to decline. Because the altcoin exhibits reduced sensitivity to price fluctuations, it offers a more favorable risk-reward balance and a less risky market for investors.
A less volatile market condition may be ideal for Toncoin investors to accumulate tokens with less exposure to abrupt price movements. However, the Quicktake analyst warned investors to approach the market with caution as the “lower risk zone” may not be completely safe.
Darkfost specifically advised investors to still pay attention to Bitcoin’s price movements as the market tends to react to fluctuations in the major cryptocurrency.
Toncoin will overtake Ethereum in this metric before 2025
In a separate Quicktake post, an analyst did just that projected Toncoin will overtake Ethereum in terms of adoption before the end of 2024. According to Maartunn, the number of TON holders, which currently stands at 112 million, is expected to surpass ETH holders by December 20, 2024.
This projection is based on Toncoin’s recent growth spurt, which has seen the network gain an average of 500,000 new holders per day over the past month. According to the Quicktake analyst, the number of TON holders could surpass that of Ethereum (currently 137 million) if this trend continues.
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However, Maartunn noted that this forecast does not take into account the potential of a slowdown in TON growth and the continued growth of ETH holders. The analyst acknowledged that although these two factors are just variables, they can still influence the expected data.
Featured image from Unsplash, chart from TradingView
