Over the course of the weekly trading session, Toncoin [TON] witnessed a moderate uptick in its pricing dynamics. The altcoin experienced a surge from a local low of $4.7 to a peak of $6.09. However, in the past 72 hours, the altcoin retraced slightly. Presently, as of the time of drafting this article, Toncoin was exchanging hands at $5.66, reflecting a decrease of 0.98% within the last day.
Remarkably, the altcoin had retracted by 10.81% on the monthly charts.
This increased market volatility has sparked discussions among experts. Among them is Cryptoquant analyst Joao Wedson, who observed a spike in TON’s risk exposure ratio – a potential signal of a bullish market sentiment.
Increment in Toncoin’s risk exposure ratio
Wedson’s evaluation indicated that TON’s risk exposure ratio currently hints at a moderately elevated risk level within the Toncoin ecosystem.
He attributed this surge to a notable part of TON’s Total Value Locked (TVL) being designated to high-risk sectors like lending, derivatives, and options, which are significantly exposed to market liquidity risks.
Consequently, following Toncoin’s previous major price upsurge, the risk exposure ratio has been on a consistent upward trajectory. This upward trend signifies an inflow of capital into leveraged financial instruments such as loans and derivatives.
While this surge may raise concerns regarding stability, it can also indicate market confidence. An increasing demand for derivatives and leverages indicates growing market optimism – a symbol of faith in market trends and bullish sentiments among investors.
Nevertheless, networks that are over-leveraged might amplify losses during bearish market phases. This situation can, however, be viewed positively by speculative traders who leverage the rising demand to capitalize on derivative markets.
Implications for TON’s Price Movement
Although the rise in the risk exposure ratio may hint at caution due to its association with heightened volatility, it could also signify market confidence and a bullish outlook.
Evidence of this bullish outlook and market confidence can be seen through the sustained decrease in the token supply on exchanges.
This figure has dwindled from 1.9 million to 1.82 million in the past week, indicating increased accumulation as investors transition TON tokens into private wallets for self-custody.
Furthermore, the recent three-day positive shift in the netflow of large holders, amounting to 122.33 million TON tokens, indicates a bullish stance among whales. This signals that whales are accumulating more tokens rather than selling them.
An upsurge in capital inflows from whales signifies a positive market sentiment.
Lastly, the positive DAA divergence in Toncoin’s price has been sustained over the past week. A positive DAA divergence suggests that the recent price surge is backed by a rise in active addresses, indicating a robust market with strong fundamentals.
To sum up, the surge in the risk exposure ratio seems to be attracting more speculative traders to the market. If this trend and capital inflows persist, Toncoin is poised for further gains. Consequently, TON could potentially reach its previous level of $6.2. However, in the scenario where conservative investors withdraw from the market, apprehensive of heightened volatility, TON could dip to $5.4.