- Toncoin’s risk exposure ratio has increased, which is a sign of market confidence
- Market indicators suggested that TON could see a trend reversal and post gains
On the weekly charts is Toncoin [TON] made a moderate recovery on the price charts. During this period, the altcoin rose from a local low of $4.7 to a high of $6.09. However, over the past three days, the altcoin has made a slight comeback. At the time of writing, Toncoin was trading as high as $5.66 – down 0.98% in the past 24 hours.
This, after the altcoin depreciated by 10.81% on the monthly charts.
This market volatility has analysts talking. One of them is Cryptoquant analyst Joao Wedsonwith the analyst noticing a spike in TON’s risk exposure ratio – a sign of potential bullishness.
Toncoin’s risk exposure ratio is rising
In his analysis, Wedson stated that TON’s risk exposure ratio currently suggests that the level of risk within the Toncoin network is fairly high.
Source: Cryptoquant
According to him, the reason behind this increase is that a significant portion of TON’s TVL has been allocated to various areas such as lending, derivatives and options, which are highly exposed to market liquidity risks.
As such, the risk exposure ratio has been on a sustained upward trend since Toncoin’s last major price rally. This upward movement is a sign of increasing capital inflows into leveraged financial products such as loans and derivatives.
While this increase may pose stability issues, it could also be a sign of market confidence. Rising demand for derivatives and leveraged securities means growing market optimism – a sign of confidence in the market trend and investors’ bullish sentiment.
However, over-indebted networks can magnify losses during bearish trends. This aspect can therefore be viewed positively by speculative traders who are taking advantage of the rising demand to profit from derivatives markets.
What does it mean for the price of TON?
While the increase in the risk exposure ratio could indicate caution as it correlates with higher volatility, it could also point to market confidence and bullish sentiment.
Source: Santiment
We can see this bullish sentiment and market confidence in the continued decline in supply on the stock exchanges.
This has fallen from 1.9 million to 1.82 million over the past week – a sign of increased accumulation as investors transfer TON tokens to private wallets for self-custody.
Source: IntoTheBlock
Moreover, the whales have turned bullish over the past three days, with the net flow of major holders turning positive to 122.33 million TON tokens. This implied that whales buy and collect more tokens than they sell.
An increase in whale capital inflows demonstrates market confidence.
Source: Santiment
Finally, Toncoin’s price-DAA divergence has remained positive over the past week. A positive DAA divergence means that the recent price increases are supported by growing active addresses. So the market is healthy and has strong fundamentals.
In conclusion, it appears that the increase in risk exposure ratio has driven more speculative traders into the market. If this trend and capital inflows continue, Toncoin will post more profits. As such, TON could regain its $6.2 level. However, if conservative investors avoid the market and close their positions for fear of increased volatility, the TON could fall to $5.4.