Toncoin (TON) Price at Risk of $6 Reverse as Network Usage Declines 35%

Toncoin Price Analysis

Toncoin price experienced a modest uptick on August 23, climbing 3.5% to surpass $6.60. This comes after a challenging start to the week, which saw the cryptocurrency drop by 9.5%. However, with Toncoin network activity on the decline, further downward movement could be on the horizon.

Signs of Buyer Fatigue in Toncoin Markets

Following the broader cryptocurrency market’s recovery from the August 5 crash, Toncoin, alongside Litecoin and XRP, quickly emerged as top performers.

While XRP’s gains were driven by favorable developments in the Ripple vs. SEC case, Toncoin price was boosted by Russia’s new legislation, effective August 8, which legalized cryptocurrency mining. This news also gave a lift to other Proof-of-Work (PoW) assets such as Litecoin and Bitcoin.

Toncoin’s close connection to the Russian market helped it outperform Bitcoin and Litecoin. Despite a volatile beginning to the month, Toncoin price fell to a three-month low of $4.78 on August 5, only to stage an impressive 48% rebound, reaching $7.10 by August 19.

On August 23, Toncoin price was trading at $6.60, a 3.5% rise in the last 24 hours. Nevertheless, the market appears to be entering a phase of consolidation.

This consolidation indicates that short-term traders who bought Toncoin during the early August slump are now taking profits. Toncoin price dropped below $6.50 on August 22, marking four consecutive losing days and a 9.5% decline since August 18.

The failure to overcome the $7.50 resistance has weakened bullish sentiment. Without new positive catalysts, Toncoin price could be poised for further declines in the near term.

Toncoin Network Activity Drops 40%

The recent rally in Toncoin price appears to have been driven by speculative traders capitalizing on bullish news stemming from Russia’s legalization of crypto mining. However, on-chain data shows a significant drop in Toncoin network activity, which could stifle further price increases.

The Network Fees metric is a valuable indicator of how investors respond to market shifts. Although bulls managed to push Toncoin price up by 48% from the August 5 lows, the focus has increasingly shifted to speculative trading, with less emphasis on fundamental network activity.

Between August 14 and August 21, Toncoin network fees fell dramatically from 15,650 TON to 9,500 TON, reflecting a 40% reduction.

This sharp decline in network fees, a key indicator of economic activity on the Toncoin network, raises concerns. Firstly, it suggests a decrease in transaction volumes, which may indicate waning investor interest. Historically, such reductions in network engagement often precede significant price corrections, as lower network activity typically corresponds with diminished demand. Secondly, the decline could indicate that speculative traders are exiting the market, potentially leading to increased selling pressure.

TON Price Forecast: $6 Retest in Sight?

The technical outlook for Toncoin price points to further downside potential, with the likelihood of a retest of the $6 support level. Current technical indicators suggest a bearish trend, with the Relative Strength Index (RSI) hovering around a neutral 50.60, indicating a lack of strong momentum in either direction.

Toncoin price faces significant resistance at the $7.50 mark. Should this resistance remain unbroken, it could lead to increased selling pressure, driving the price down toward the $6.37 support level.

A breach of this support could see Toncoin price falling further, with $6.00 serving as a critical support area.

In summary, Toncoin price may struggle to sustain its recent gains amid declining network activity and the absence of new bullish drivers. Without a resurgence in buying interest, a retest of the $6 support level seems likely in the short term.