Toncoin (TON) has been doing well, especially after breaking out of its downtrend, but its rally may soon end.
This is because the sudden rise has resulted in the market overheating, which, if continued, will create a price top.
Toncoin has little room for maneuver
Investors saw considerable gains due to the recent rise in Toncoin’s price, which maintained their optimism. However, the cryptocurrency could be close to witnessing a reversal, resulting in a new consolidation or correction.
This is because, according to the total profit supply, TON is close to reaching a market top. A market top indicates the highest point in a market’s uptrend before a possible reversal. This is generally observed when more than 95% of an asset’s supply is profitable.
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More than 90% of all TON in circulation is generating profits, which brings it closer to meeting the conditions mentioned above.
Furthermore, the asset is currently overvalued according to the Market Value to Realized Value (MVRV) ratio. The MVRV index evaluates the investor’s profit or loss.
Toncoin’s 7-day MVRV is at 5.2%, signaling profits, which could lead to selling. Historically, corrections occur within the 4% to 12% range of the indicator, which classifies it as a danger zone.
Therefore, as it is overvalued, TON is unlikely to continue rising. This could lead to corrections as the market cools.
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Price prediction
Toncoin could still see some upside if it closes above the $6.04 support level. This level has been tested in the past and often leads to further price jumps. However, this increase would be halted at the $6.50 resistance level.
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This is because, by then, TON would validate the market top and be well in the danger zone of the MVRV index. Consequently, the altcoin would likely fall back to $6.0 or $5.4.
However, if holders choose not to sell and instead hold their coins, Toncoin could surpass the $6.5 mark. This would invalidate the bearish thesis, allowing the price to post further gains.
Disclaimer
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