Toncoin (TON) took a big hit after Telegram founder Pavel Durov was arrested on August 25, dropping more than 25% in value. This included a drop to $4.45 on September 6, before surging 15% to $5.15 by September 9.
Despite the recovery, technical indicators show that Toncoin is at risk of continuing its current downtrend.
TON Price Crisis 30% Drop in September
TON’s continued price recovery is part of an inverse cup and handle pattern that forms a circular top followed by a period of consolidation.
The inverted cup and handle is a bearish continuation pattern. It is usually resolved when the price breaks below the common neckline support line and declines the maximum distance between the top of the cup and the neckline.
On September 3, the TON/USDT pair entered the breakdown phase of the pattern after falling below the neckline support level of around $5. A week later, the price was testing the neckline as a resistance line.
TON/USDT daily price chart. Source: TradingView
A re-test of the neckline as support would most likely invalidate the inverse cup and handle pattern. However, a successful retest where price fails to move back above the neckline would confirm that previous support has been turned into resistance, indicating that sellers are still in control and the breakdown is likely to continue.
In this case, TON’s downside target is likely to be around $3.60, which is about a 30% drop from the current price level.
Telegram Steps Up Crackdown on Durov
The bearish outlook for Toncoin has been further compounded by Telegram’s relationship with Durov, which is largely due to the ongoing global crackdown on the messaging app service.
For example, South Korea joined the global crackdown on Telegram, investigating the platform for facilitating deepfake crimes. India, Telegram’s largest market with over 100 million users, also launched an investigation shortly after Durov’s arrest was reported.
Indonesia is considering blocking the platform for inappropriate content moderation, while the European Union is reportedly investigating Telegram for allegedly providing false user data.
relevant: Durov Incident Drives Toncoin to Market Cap of $13.96 Billion
Negative sentiment around these legal issues could continue to weigh on TON’s price as investors anticipate further market volatility or denial of access to the project.
But TON whales don’t seem to be swayed by the negative press. Santiment data shows that the wealthiest investors (those with 10-100 million token balances (brown)) have increased their TON holdings since Durov’s arrest.
TON supply distribution among whales. Source: Santiment
Additionally, the TVL (Total Value Locked) across the TON ecosystem increased during the September price decline, as gaming and memecoin projects like DOGS were launched on the network.
TON Blockchain TVL. Source: Challenge Rama
Therefore, the underlying Toncoin ecosystem continues to attract users and developers, which may help offset the headwinds in the long run.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.