Toncoin (TON) Sell-Offs Are Increasing: Onchain Data Is Scary

Toncoin's market value/realized value (MVRV) ratio, which measures the profitability of its investors, shows that the altcoin has been undervalued in recent weeks.

Toncoin (TON) on-chain metrics suggest that the altcoin has been trading below its fair value recently, increasing the risk of a downside due to short-term investors.

Toncoin’s market value to realized value (MVRV) ratio, an indicator used to gauge the profitability of an asset’s investors, has been in the negative territory for the past few weeks, showing that TON investors are underwater overall. As of press time, TON’s 30-day and 90-day MVRV ratios are at -0.26% and -5.38%, respectively, suggesting that the altcoin is undervalued according to on-chain data. Moreover, shorter-term investors have been ramping up their selling activity.

Toncoin’s 30-day net realized loss metric has been positive throughout February, indicating that short-term holders have been booking profits as the token’s price rose by 1% in the past seven days. However, last week, the metric turned sharply negative, showing that short-term holders have been selling at a loss. This sell-off activity increased last week as Toncoin whales’ net flows dropped by 115% despite a positive price action.

Whales, or large cryptocurrency holders, are important indicators of market trends. Their net flows, over a period of time, can provide an insight into the market sentiment—the difference between what they are buying and selling. When a cryptocurrency’s net flow decreases, it signals that whales are, on the whole, decreasing their holdings, which is a sign of selling pressure and a possible price decline.

Short-term investors could be pressuring price down

Short-term (STH) TON investors have also been decreasing their duration of holding the token, increasing the chances of a downside. According to IntoTheBlock, the STH realized price has been declining by 7% over the past month, indicating shorter holding periods.

STH holders, who usually hold an asset for less than 30 days, are known to sell when they want to either book profits or protect them against a projected price decline. A decrease in STH holdings generally signals a decreasing demand, adding more downward pressure to an asset’s price.