Toncoin [$TON] is on the verge of erasing all gains made after a strong rally in May. The altcoin dropped to a monthly low of $1.4 before slightly rebounding.
As of this writing, the altcoin traded at $1.5, down 2.1%, adding to its 10.2% weekly decline. With the price slip, $TON fell below both its short- and long-term moving averages, underscoring the strength of the downtrend.
Toncoin speculators take a step back
As $TON continued to drop, leveraged longs were hit with massive liquidations. On the 5th of June, $7.66 million worth of longs were liquidated, while the pressure declined to $1 million on the 6th.
Source: CoinGlass
Such a massive liquidation suggested traders have been overly bullish, and the price drop forced them out of the market. As a result, this created more selling pressure in the market as traders started to exit.
With fear hitting the market, traders hurriedly closed their positions. In fact, the altcoins Open Interest fell 10%, hitting a monthly low of $318 million.
Source: CoinGlass
Traditionally, when speculative activity dries up, the market weakens in the short term. In the long run, the market cools down and could provide significant stability.
Traders on the Spot lock in gains
In addition to reduced speculative activity, holders have also started to cash out. As prices continued to decline, some traders chose to lock in gains.
According to CoinGlass data, the altcoins Spot Netflow turned positive after holding negative over the past week. As of this writing, Spot Netflow was $1.32 million, a significant reversal from -$4.59 million the previous day.
Source: CoinGlass
This shift suggests that most active traders on the Spot are aggressively selling. Often, increased selling pressure on the Spot has preceded further market weakness.
Can $TON defend the $1.5 support level？
The recent selling spree has significantly weakened Toncoin‘s bullish structure. Even though bears have yet to totally overrun the market, bulls’ influence remains relatively low.
The Directional Movement Index (DMI) validates this market situation. The +DI of the DMI dropped to 24 while the negative index rose to 21.
With ADX jumping to 25, it suggested strengthening downside momentum. When +DI is declining while ADX and -DI are rising, it suggests the downside risk is significantly greater.
Source: TradingView
Such a market setup has followed an extended period of market weakness. Therefore, if the recent selling pressure persists, $TON could lose the $1.5 support and drop to $1.3.
To invalidate this bearish outlook, $TON must hold $1.5, and reclaim $2. Failure to do so will cause the decline to continue unless market sentiment recovers across the broader market.
Final Summary
- Toncoin dropped to a monthly low of $1.5, with bearish sentiment dominating both Spot and Futures markets.
- Traders are questioning whether bulls can defend the $1.5 level amid mounting market panic and fading confidence.