Toncoin Price Could Crash As Burn Rate Drops

Toncoin price has suffered a harsh reversal, mirroring other altcoins that have lost momentum this month. This sell-off accelerated after the Federal Reserve’s hawkish decision on Wednesday. Fundamentals like the rising TON inflation, falling burn rate, and poor performance of its ecosystem tokens mean that the coin may continue falling in the near term.

Toncoin Price At Risk As Burn Rate Drops

TON price may be at risk as its fundamentals continue to deteriorate. According to TonStat, the number of Toncoin burned a day has dropped to less than 6,000. This is a big drop since the figure stood at almost 40,000 in September, noting a 85% drop. A token burn is a situation where crypto coins are removed from circulation, boosting the remaining ones. In TON’s case, the token burn comes from the fees that the network generates. In theory, a cryptocurrency often drops when there is not much token burn going on.

Toncoin’s burn rate has fallen as the annual inflation has continued rising. TON’s inflation has risen to 0.31%, its highest level since August, and much higher than the year-to-date low of 0.33%. This inflation happened as the number of new Toncoin minted a day has continued rising. It rose to over 84,000 on December 18, increasing the amount of supply. 

Further data show that the amount of fees collected in the TON blockchain has continued falling. It fell to 11,505 TON on Wednesday from the year-to-date high of 78,000 TON. 

TON Blockchain Ecosystem Struggles

Meanwhile, the TON ecosystem has lost momentum. The total value locked (TVL) in its DeFi protocols has continued falling and now stands at $275 million from the year-to-date high of $760 million.

Further, most TON tokens have plunged as the number of users retreated. For example, the Hamster Kombat token has fallen by 22% in the last 30 days and only 2.7% holders are in profit. Similarly, PunkCity has dropped by 34%, while Catizen has fallen by 31% in the same period.

Toncoin Technical Analysis: TON Could Fall To $4.440

The TON price recently peaked at $7.10, where it formed a double-top pattern. This pattern is made up of two peaks with a neckline, whose in this case is $4.4392, its lowest level on September 6.

Toncoin price has also dropped below the 50-day and 100-day moving averages, which are about to form a bearish crossover. It has also moved below the Ichimoku cloud indicator. 

Therefore, the outlook for the coin is bearish, with the immediate target being at $4.4392, which is about 18% below the current level. It is also a few points below the 50% Fibonacci Retracement point. A move below that level will point to more declines, potentially to the 61.8% retracement point at $3.90.

On the flip side, the bearish view will become invalid if the coin rises above the key resistance at $6, the highest point on September 27.

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crispus

Crispus is a seasoned Financial Analyst at CoinGape with over 12 years of experience. He focuses on Bitcoin and other altcoins, covering the intersection of news and analysis. His insights have been featured on renowned platforms such as BanklessTimes, CoinJournal, HypeIndex, SeekingAlpha, Forbes, InvestingCube, Investing.com, and MoneyTransfers.com.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.