Toncoin Network Activity Declines 40% as Russian Hype Wanes

Toncoin (TON) Price Analysis for August 22, 2024

Toncoin price tumbled below $6.50 on August 22, 2024, marking a 9.5% decline within the weekly timeframe. On-chain data indicates a significant decrease in TON network activity, coupled with a surge in speculative trading. These factors signal a potential for a larger correction phase ahead, as bullish momentum wanes.

Toncoin Succumbs to 9.5% Correction

Following the cryptocurrency market recovery from the August 5 crash, Toncoin, along with Litecoin and XRP, rapidly ascended on the top gainers’ charts. XRP’s rally was driven by a favorable ruling in the Ripple vs. SEC case, while Toncoin and other Proof-of-Work (PoW) projects like Litecoin and Bitcoin gained from Russia’s new law, which legalized crypto mining around August 8.

Toncoin’s founder’s connections to the Russian market further amplified the bullish sentiment, lifting TON above Bitcoin and Litecoin.

However, after a volatile start to the month, where XRP to a three-month low of $4.78 on August 5, a remarkable 48% recovery propelled it to $7.10 by August 19.

Despite this recovery, recent trends indicate the market has slipped into a consolidation phase. Strategic short-term traders, who purchased TON during the early August market crash, are now booking profits.

As of August 22, Toncoin is trading below $6.50, retracing 9.5% since August 18, with four consecutive losing days. This failure to breach the $7.50 resistance level has dampened bullish sentiment, and without a new catalyst, further correction appears imminent.

Toncoin Network Activity Sees 40% Decline

The recent Toncoin price surge over the last three weeks seems to have been driven primarily by speculative traders capitalizing on bullish tailwinds from Russia’s legalization of crypto mining. However, on-chain data suggests a persistent decline in network activity could halt this rally.

The Network Fees metric is particularly useful in monitoring investor reactions to price movements and critical market events.

During the 48% rebound from the August 5 lows, bulls dominated the TONUSD price action. However, the focus has increasingly shifted toward speculative trading at the expense of fundamental network activity.

The chart from IntoTheBlock shows that Toncoin network fees dropped from 15,650 TON on August 14 to 9,500 TON as of August 21, marking a 40% decline. This reduction in fees collected from economic activities on the network is a bearish signal for two main reasons.

First, it indicates waning investor interest, suggesting that fewer transactions are taking place. Historically, declines in network fees have often preceded significant price corrections, as reduced network usage typically correlates with lower demand. Secondly, this drop could signal that speculative traders are exiting the market, which could lead to increased selling pressure.

Toncoin Price Prediction: Bulls Wary of $6 Reversal

The Toncoin price forecast suggests a bearish outlook based on the recent technical indicators. The Parabolic SAR is positioned at $5.96, indicating that any movement below this level could trigger a further sell-off.

Additionally, the Bollinger Bands show that Toncoin is trading near the lower band, suggesting potential downward momentum. The key resistance levels are $7.22 and $7.50, while critical support levels are $6.34 and $5.96.

Given the current bearish sentiment and the declining network activity, Toncoin may struggle to regain the $7 level.

Without a new bullish catalyst, a break below $6 could see Toncoin revisiting the $5.50-$5.80 range in the short term. Traders should closely monitor the $6.34 support level, as a breach could signal further downside for Toncoin price.