TON faces an 18% drop as THESE bearish signs emerge

• TON’s Sharpe ratio has flipped negative showing low rewards to holders.
• TON risks an 18% drop if the price fails to make a bullish breakout from consolidation.

Toncoin [TON] has underperformed against Bitcoin [BTC] and other altcoins in the last 30 days after a 5% drop in price. At press time, TON traded at $5.28, as mild volatility hindered significant price moves. 

A look at the Sharpe ratio shows that holders are currently sitting at significantly low rewards. At press time, this metric was negative, and at its lowest level in one month.

Source: CryptoQuant

A negative Sharpe ratio shows that the risk of holding Toncoin is higher than the reward. With TON failing to post significant gains, a predominantly low and negative Sharpe ratio could dampen interest in the token causing further dips. 

TON stagnates amid low volatility 

TON’s one-day chart shows that in the last two weeks, the price has oscillated between $5 and $5.40. During this time, the Relative Strength Index (RSI) has been below 50 showing a lack of buyer interest to support a breakout. 

Source: Tradingview

At press time, TON’s RSI stood at 47, suggesting that sellers are more than buyers. The lack of buying activity paints a contrasting image from the broader market as the crypto fear and greed index shows retail interest in crypto assets is high. 

TON’s lack of a strong breakout, to either the upside or downside, also comes amid low volatility as seen in the contracting Bollinger bands. 

The token touched the upper band at $5.39 before facing resistance. If the price breaks above, it could signal the start of an uptrend.

However, if Toncoin fails to break out from this consolidation phase, the price risks a steep 18% drop from the current price to the 1.618 Fibonacci level ($4.28). 

TON wallets that are in losses might be the catalyst behind such a drop. Data from IntoTheBlock shows that these wallets have increased by 29% in three weeks to 63%.

Source: IntoTheBlock

If these traders choose to minimize losses, it could increase selling pressure, and cause further dips. 

TON blockchain shows signs of recovery 

The TON blockchain saw a surge in usage in late September. However, since then, the number of active users and transactions on the network has plummeted. 

Read Toncoin’s [TON] Price Prediction 2024–2025

Data from TokenTerminal shows a slight recovery. On 20th October, the daily active users on TON increased from 567,000 to 792,000. The daily transaction count also increased from 5 million to 5.7 million. 

Source: TokenTerminal

An increase in the network’s usage has previously been a catalyst for growth. Therefore, if this recovery continues, it could renew bullish sentiment around Toncoin.