Toncoin (TON) has experienced a significant downturn in the past 24 hours, with prices plunging due to a surge in panic selling following the arrest of Telegram CEO Pavel Durov by French authorities.
The price of TON fell by 25%, hitting $5.24 on August 25, a day after news of Durov's detention spread widely. Durov faces charges related to violations of data privacy and cryptocurrency regulations.
Telegram has played a crucial role in promoting and integrating Toncoin within its ecosystem, making Durov a pivotal figure in the cryptocurrency's narrative and development. Consequently, some Toncoin traders reacted to the news by liquidating their holdings in panic.
However, various technical and market indicators suggest that Toncoin may be poised for a significant rebound in the weeks ahead.
Potential for Rebound Similar to BNB
Toncoin's current price drop bears resemblance to the performance of Binance Coin (BNB) before the sentencing of former Binance CEO Changpeng Zhao (CZ).
Ahead of CZ's sentencing in the U.S. on April 30, BNB dropped by 13.50%. However, following the resolution of the legal situation, BNB rebounded strongly, rising by nearly 35% from its lows to almost $700 by June 6.
"When news of legal troubles breaks, especially involving key figures like CZ and Durov, it triggers a wave of panic selling as traders rush to protect their investments from potential fallout," said a market analyst.
"However, once the initial shock subsides, the market reassesses the situation more rationally."
In BNB’s case, after the legal dust settled around CZ’s sentencing, traders realized that the legal issues did not pose an existential threat to Binance or its ecosystem. This shift in perception from fear to optimism prompted traders who had previously sold out of panic to re-enter the market, driving BNB’s price up by 35%.
A similar psychological pattern could unfold for Toncoin. Initially, Durov’s arrest might be perceived as a major warning sign, prompting sharp declines as traders exit their positions. But if the market later views the arrest as an isolated incident that doesn't fundamentally undermine the Toncoin ecosystem, it could lead to a buying opportunity amid the panic.
Technical Indicators Suggest Support
From a technical standpoint, Toncoin is trading within a well-defined ascending channel range, as indicated in the daily chart.
The TON/USDT pair recently bounced off the channel's lower trendline, which has served as strong support since the channel's formation earlier this year.
Moreover, Toncoin’s daily relative strength index (RSI) was at 37.54 on August 25, nearing the oversold threshold of 30, which typically signals a potential consolidation or rebound.
The upper trendline of the ascending channel currently sits around $8.50. A move toward this level would represent a roughly 50% gain, aligning with the bullish momentum suggested by the RSI.
Rising Open Interest and Funding Rates Indicate Market Optimism
Futures market data for Toncoin also reflects growing trader confidence. Following Durov’s arrest, Toncoin’s open interest (OI) surged to $303.62 million, its highest since July. Simultaneously, its funding rates for every eight hours reached a three-month high of 0.0101%.
"Rising open interest suggests that more money is flowing into Toncoin's futures market, indicating increased interest and speculation on price direction," said another analyst.
"The positive funding rates show that traders are willing to pay a premium to hold long positions in TON."
This increased funding rate implies that traders are betting on a price rise, which could fuel a rapid upward movement. If this momentum persists, Toncoin could potentially reach the $8.50 target and beyond.
