Telegram-linked cryptocurrency Toncoin (TON) has lost nearly 10% of its value over the past week and continues to show signs of weakness in the market. Its downtrend has pushed its price toward the lower line of its horizontal channel, forming a crucial support floor since March.

The token’s technical setup suggests the possibility of another double-digit drop soon if the support level fails to hold. This analysis explores what TON holders need to know.

Toncoin traders ignore the signals

Toncoin’s funding rate has remained predominantly negative recently, signaling traders’ lack of confidence in a near-term price recovery. At the time of writing, it stands at -0.0068%.

The financing rate refers to the periodic fee paid to ensure that an asset’s contract price remains close to its spot price. Simply put, it represents the cost of holding a long or short position for a specific period.

A negative funding rate, on the other hand, means that more traders are betting on the asset to fall than to rise. This can put downward pressure on the price as these traders are incentivized to sell to reduce their exposure.

Read more: Telegram: How to Use Cryptocurrency Groups in 2024

Toncoin funding rate. Source: Coinglass

The falling price of TON, combined with its negative funding rate, could create a self-reinforcing cycle where the fall itself leads to more bearish bets, pushing the value downhill.

Furthermore, an assessment of the buying and selling pressures in the TON market reveals the balance of power in favor of the bears. Readings from the token’s Directional Movement Index (DMI), which measures strength, show the positive directional indicator (blue) below the negative directional indicator (red).

When the reading is like this, it means that the asset is experiencing more downward trends than upward movements. Traders see this as a bearish signal, suggesting that sellers are stronger than buyers.

DMI do Toncoin. Fonte: TradingView

TON Price Prediction: Will History Repeat Itself?

TON is currently trading at $5.34 and is trending towards the lower line of its horizontal channel, which has formed support since March. It dropped to this line in early September but failed to break it as the bulls managed to defend it.

If this repeats, Toncoin price will reverse course and rise towards the resistance at $7.96.

Read more: Top 6 Toncoin (TON) Wallets in 2024

Toncoin price analysis. Source: TradingView

However, if the support level fails to hold, the price will plunge 17% to a monthly low of $4.43, invalidating the above bullish projection.

The article Why Toncoin (TON) Could Drop 17% Soon? appeared first on BeInCrypto.