Over the recent period, Tonicoin [TON] has experienced a consistent decline in its total value locked (TVL) on both decentralized and centralized exchanges, as well as in derivatives and options trading. Analyst Joao Wedson from CryptoQuant suggests that this downward trend could be indicative of de-leveraging activities among traders and investors.
It appears that market participants have grown disheartened with Tonicoin, leading to a reduction in exposure to the token. This diminishing interest is likely the primary reason behind the ongoing decrease in trading TVL observed since July 2024.
The recent bout of volatility in Bitcoin [BTC] and the broader altcoin market has further intensified the decline in trading TVL as we stepped into January. Nevertheless, amidst this downward trend, could there be an opportunity for potential buyers to step in?
By examining the 1-day price action chart, it becomes apparent that Tonicoin is hovering close to its half-year lows around $4.62, just slightly above the 61.8% Fibonacci retracement level traced back to the rally that commenced in March 2024.
Therefore, the price range between $4.46 and $4.60 forms a robust demand zone that is likely to witness strong support upon retesting. Furthermore, the On-Balance Volume (OBV) has not plummeted below its recent lows, indicating that the selling pressure hasn’t reached significant levels.
Insights from Supply Distribution and Netflows
Recent data suggests a steady increase in addresses holding less than 100 TON over the past few months, indicating a growing number of participants joining the ecosystem and acquiring Tonicoin. However, these smaller holders typically do not have a substantial impact on market movements.
On the other hand, the real market influence comes from the whales, who have been dwindling in numbers. Addresses categorized as Sharks and Whales, holding between 100 TON and 100k TON, have decreased since August 2024, pointing towards potential token distribution. Moreover, the recent movement of TON to exchanges has raised concerns about a possible increase in selling pressure.
The recent decline in the altcoin’s price has led to a rise in the staking TVL ratio, indicating the proportion of total TVL allocated to staking activities. This uptrend highlights the confidence among long-term hodlers.
With a consistent uptrend in recent months, it seems that participants are refraining from withdrawing their staked assets for active trading purposes, partly due to the market’s sideways movement and absence of a clear long-term uptrend.
Considering the decline in trading TVL coupled with these market conditions, there may be a compelling long-term buying opportunity emerging for potential investors.