Toncoin (TON) Price at Risk of a Correction as Market Overheats

Trading activity in the cryptocurrency market has declined in the last month. As a result, global cryptocurrency market capitalization has dropped by 4% in the past 30 days.

While several crypto assets have seen their values plummet by double digits, Toncoin’s (TON) price has risen. Trading at $7.93 as of this writing, the altcoin’s value has increased by 24% in the last month.

Toncoin’s Price Rally May Not Be Sustainable

An on-chain assessment of TON’s price movements shows buyers’ exhaustion may have set in. This is based on readings from the token’s Price-Daily Active Address (DAA) Divergence.

This metric compares an asset’s price movements with the changes in its number of daily active addresses. It tracks whether an asset’s price movement is supported by corresponding activity on its network. 

As of this writing, TON’s Price-DAA Divergence is 281.15%. This signals that its price has skyrocketed significantly compared to its daily active addresses. It suggests a 281.15% difference between the altcoin’s price and the change in its daily active addresses.

When this metric spikes like this, it signals that the price rally has occurred without a corresponding increase in network activity. This may mean that TON’s price rally has been driven by speculative buying or potential overvaluation.

Confirming that TON is overvalued, its Market Value to Realized Value (MVRV) ratio is 59.18%. An asset’s MVRV ratio measures the ratio between its current price and the average price at which all its coins or tokens were acquired. 

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When its value is above one, the asset’s current market value is significantly higher than the price at which most investors acquire their holdings. It is deemed overvalued, and most traders sell for profit at this level.

TON Price Prediction: Divergence Hints at Potential Correction

Despite TON’s price rally in the last month, its Chaikin Money Flow (CMF) has trended downward since June 15.

This indicator measures money flow into and out of the market. A bearish divergence is created when an asset’s price rises while its CMF falls. This suggests that the price uptrend might be losing momentum and may be unsustainable. Traders interpret this as a warning signal of a potential price reversal.

If TON’s price corrects, it may fall to $7.70.

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However, if demand increases and the token maintains its uptrend, TON’s value may rise to $8.28.