Toncoin (TON) Faces Market Uncertainty as Swaps Interest Declines

Since the Christmas Eve upswing, Toncoin [TON] has traded sideways. Therefore, since hitting a high of $6, TON has retraced to $5.6.

Toncoin (TON) has traded sideways since the Christmas Eve upswing. After hitting a high of $6, TON has retraced to $5.6, leaving analysts wondering about the lack of upward momentum.

CryptoQuant analyst Joao Wedson has observed a continued decline in interest for Swaps, which is impacting the altcoin.

A sharp decline in the number of swaps on the Toncoin network decentralized exchanges has been observed by Wedson. According to him, the average daily users on STON.fi have dropped to 13,300 and on DeDust to 5250.

This is a massive drop from September levels, when the altcoin saw almost 200,000 daily users on the two platforms.

The decline in users is being impacted by three main factors. First, there is a reduction in open positions, with many traders liquidating or reducing their exposure on decentralized exchanges.

Secondly, the TON community has experienced uncertainty over the legal issues since the arrest of its founder months ago, impacting participation and trust in network-based platforms.

Finally, the overall crypto market has seen unfavorable conditions since the last FED rate cuts, with lower trading volumes and reduced risk appetite.

As TON sees a decline in swaps, investors are shifting in interest from decentralized trading towards staking. While this decline may seem challenging, it can also provide a strategic opportunity. Historically, periods of low interest and market inactivity have served as attractive entry points for investors.

Notably, a sharp decline in interest for swaps reflects declining buying pressure as investors express uncertainty about the market direction, reducing their risk exposure.

As such, Toncoin is seeing a steep drop in demand amidst market uncertainty as investors take cautious positions.

We can see this decline in demand through TON’s stock-to-flow ratio. According to Santiment, the altcoin’s SFR has experienced a drop over the past three days to zero.

When SFR drops like this, it signifies oversupply and reduced scarcity. With increased supply, the altcoin risks selling pressure causing downward pressure on prices.

This oversupply is further evidenced by a spike in TON’s supply on exchanges. As such, the exchange flow balance has surged to 3459. This shows that investors are sending more assets to exchanges.

Simply put, TON is currently reducing demand, and investors have turned overly cautious. This shows that investors lack confidence in the market, with most closing their positions while reducing their risks.

Therefore, if these conditions persist, TON could drop to $5.2. However, if investors view the decline as a buying opportunity, the altcoin could break out of the consolidation range to $6.1.