Toncoin Price at Risk: Telegram CEO, Pavel Durov’s Arrest in France Sparks $300M Inflows

Toncoin Price Analysis

Toncoin price fell 24% in the last 24-hours after Telegram CEO Pavel Durov was arrested in the France on Saturday Aug 24. Derivative markets data analysis provides insights into how TON price is likely to react.

Toncoin Price Tumbles 24% as Telegram CEO Pavel Durov’s Arrest

On Aug 24, Pavel Valeryevich Durov, was arrested in France, when his plane landed at the Bourget airport outside Paris, France.

With official details yet to be confirmed by Durov’s legal team, the Telegram CEO  allegedly faces multiple charges ranging from terrorism, trafficking, conspiracy, fraud, money laundering, and more.

Due to Telegram’s close historical links to the Toncoin blockchain network, Durov’s arrest has impacted TON price negatively.

Looking at the TONUSD 4-hourly chart above, Toncoin price fell sharply from $6.88 on Aug 24, to hit a 20-day low of $5.25 on Aug 25. Notably, this 24% Toncoin price downswing has ensued within just 16 hours of Pavel Durov’s arrest.

How is Toncoin Connected to Telegram Messenger ?

Toncoin blockchain, otherwise called The Open Network (TON) launched in 2019, initially developed by the Telegram team, led by Pavel Durov.

Briefly after its launch in 2019, the Toncoin after faced severe regulatory challenges, prompting the Durov and the Telegram dev team to cut ties with its blockchain project – upon which the TON Foundation took over development till date.

The Toncoin blockchain network has grown in prominence over the past years, due to the emergence of new themes like bot trading, SocialFi and CryptoAI.

In terms of valuation, Toncoin TVL rose to $775 million at peak, while its market capitalization crossed $25 billion as it traded north of $8 at its recent all time high in April 2024, as per CoinMarketCap data.

More so, Toncoin has emerged the fastest-growing Blockchain network in 2024.

According to DeFillama’s aggregate TVL data depicted in the chart below, Toncoin TVL grew a staggering 5,400% from $14.02 million on Jan 1 2024, to hit $773 million at peak, in July 2024.

Asides from links with Telegram founders, majority of prominent projects built on the Toncoin network leverage the social network’s 950 million global active userbase and open-source chatbot technology to launch interactive social trading and gaming services.

These makes Telegram central to the long-term viability of the TON blockchain network and the hundreds of cryptocurrency projects built on it.

Toncoin Open Interest Crosses $300M First time in 50-Days

TONCOIN blockchain, otherwise called The Open Network (TON) launched in 2019, initially developed by the Telegram team, led by Pavel Durov.

Briefly after its launch in 2019, the Toncoin after faced severe regulatory challenges, prompting the Durov and the Telegram dev team to cut ties with its blockchain project – upon which the TON Foundation took over development till date.

Telegram has emphasized the distinction as a separate entity from the Toncoin blockchain network in recent years. But due to historical ties to Telegram founders, Toncoin’s fortunes remain closely linked to the social media giant in 2024.

Indicatively, the recent trends observed in the Toncoin markets over the last 24 hours suggests that TON traders expect Telegram CEO Durov’s arrest to impact Toncoin prices significantly in the days ahead.

On Aug 24, before news of Pavel Durov’s arrest broke  TON open interest stood at $231 million as depicted in the Open Interest chart above. But within the last 24 hours, Toncoin speculative traders have entered new TONUSD futures contracts worth over $70 million, driving up Open Interest by 33% to hit $303 million as the time of writing on Sunday Aug 25.

Toncoin’s $300 million open interest figure is significant for a number of reasons, which could have varying levels of impact on TON prices in the week ahead.

Firstly, when an assets open interest surges 33% and coincides with 24% price downswing as observed in the Toncoin markets, it suggests that majority of the new capital inflows were placed on short-positions.

But simultaneously, this is the first time TON Open Interest has crossed the $300 million mark in 52 days of trading dating back to July 4. And this could have unintended positive consequences in the days ahead.

Secondly, the 32% increase in TON Open Interest far outpaces the price movements, which has only dipped 24% during that period, signaling that current Toncoin holders are not panic selling in the spot markets, despite short-traders holding sway in the speculative markets.

More importantly, while the SHORT contracts increased liquidity and investor attention brought by the fresh $75 million capital inflows likely to fortify the TONUSD futures markets and make spot prices more resistance to sharp downward moments.

Toncoin Bull Traders are Showing Short-term Resilience

The flow of losses across the TONUSD derivatives markets, in the wake of Durov’s arrest also further emphasizes Toncoin’s prospect for upward volatility, in the week ahead.

Looking at the liquidations chart below, we see that while TON Open Interest grew $75 million, only $3.5 million worth of Long positions have been liquidated in the last 24 hours.

This suggest that TON Open Interest did not shoot above $300 million from new short-positions also, but also majority of bull traders remain resilient and reluctant to close out their existing LONG positions.

This could potentially set TON price up for a major rebound in the week ahead, especially if market Fear, Uncertainty and Doubt clears. At the time of writing, on Aug 25 Toncoin price has clawed back its way above $5.60 level, having declined as low as $5.25.

How Will Durov’s Arrest Impact Toncoin Price?

While the short-term outlook for Toncoin appears resilient, the long-term impact of Durov’s arrest remains uncertain. Historical precedents from other cryptocurrencies embroiled in legal disputes, such as XRP, suggest that prolonged legal battles can have lasting negative effects on a cryptocurrency’s price.

For example, Ripple’s XRP has been mired in a legal battle with the U.S. Securities and Exchange Commission (SEC) since December 2020. This ongoing lawsuit has created significant uncertainty around XRP, stifling its price growth and market adoption. Similarly, Uniswap has faced regulatory scrutiny, which has also impacted its price and development.

If Durov’s legal issues become protracted, it could cast a lingering cloud of uncertainty over Toncoin’s long-term price action. While the short-term outlook remains bullish, the potential for a drawn-out legal battle could dampen Toncoin’s rapid growth trajectory.

Toncoin Price Forecast: Bulls Could Spark Rebound from $5.50 Support

Given the current technical indicators, Toncoin’s price could rebound from the $5.50 support level in the short term. The recent surge in open interest, coupled with the resilience of bull traders, suggests that TON could experience upward momentum in the coming days.

However, key resistance levels at $6.00 and $6.50 will likely be challenging for bulls to overcome. A break above these levels could signal a return to the $7.00 range, but failure to do so could see TON retesting the $5.25 support level.

In the long term, the outcome of Durov’s legal battle will play a crucial role in determining Toncoin’s price trajectory. While the short-term outlook remains optimistic, investors should remain cautious and closely monitor developments surrounding Durov’s arrest and its potential impact on Toncoin.

In summary, while Toncoin shows signs of resilience in the short term, the long-term impact of Durov’s arrest could hinder its growth if the legal issues are not resolved quickly. Investors should consider both the short-term potential for a rebound and the long-term risks posed by ongoing legal challenges.