Despite supply pressure, Toncoin price is expected to recover to $6 as the supply of TON stablecoin grows again.

The cryptocurrency market is showing a bearish outlook this morning as Bitcoin approaches the $60,000 mark. Like most major cryptocurrencies, the price of Toncoin is also facing downward pressure, falling 2.31% intraday as it approaches the $5 support level. With the TON blockchain witnessing another growth in the stablecoin supply, will the bearish momentum stabilize and potentially reverse?

Toncoin price target rises back to $6 as stablecoin supply on TON blockchain grows 13x

Following the arrest and legal troubles of Telegram founder Pavel Durov, the TON network showed signs of recovery.

The supply of stablecoins on the TON blockchain has surged 25% since his arrest, and has increased 13 times overall since April. Despite the turmoil caused by Durov’s arrest, the increase highlights the renewed interest and growth in the TON ecosystem.

An increase in stablecoin supply typically boosts liquidity and network usage, potentially spurring demand for Toncoin as a utility token for transaction fees and staking, supporting price increases.

According to data from DefiLlama, TON’s total value locked (TVL) has increased significantly, from $317.2 million to $402 million in the past month, a 26% increase. The increase in TVL shows that more and more investors are locking assets in the TON network and participating in decentralized finance (DeFi) protocols.

Furthermore, comparing this situation to FTX, which faced a major collapse, I think investors and users should be wary of looking ahead.

TON Price Plunge 8% Amid Downward Resistance

Amid the geopolitical turmoil, the Toncoin price fell sharply from $6.06 to $5.08, a drop of 17%. This bearish reversal on the daily chart marks another reversal of the resistance descending trendline, indicating that sellers continue to defend the high ground.

A bullish breakout from the upper trendline will signal that the recovery trend is gaining momentum and could propel the rally above the swing high of $6 to reach the $7.2 resistance level.

It is worth mentioning that Toncoin is about to form a death cross, which is a bearish signal that occurs when the 50-day exponential moving average (EMA) crosses below the 200-day EMA. This pattern is often seen as a strong sign of a long-term downtrend. When a death cross forms, it indicates that the near-term price momentum is negative and the market may face more downward pressure.

The growing bearish sentiment has been evident in Toncoin’s price action. With the 50-day and 200-day EMAs aligning to form this pattern, the likelihood of a sharp price drop is increasing.

From a macro perspective, the Network Value to Transaction Volume (NVT) ratio provides an additional bearish signal for Toncoin. The NVT ratio measures the relationship between the network’s market capitalization and total transaction volume. Currently, TON’s NVT ratio is at a seven-month high, indicating that the network’s value is inflated compared to its transaction activity.

Historically, a higher NVT ratio indicates that a cryptocurrency is overvalued and may be heading for a correction. With Toncoin’s NVT ratio at a high level, the market is signaling that the altcoin’s price could fall, especially if bearish technical indicators align.

If TON fails to hold above $4.86, the bearish trend is likely to continue. However, if the altcoin successfully arrests this decline and the broader market turns bullish, a rebound is possible. Toncoin could bounce back and turn the $5.37 resistance into support, potentially invalidating the bearish outlook and recovering the recent 13% losses.