TON may be overbought based on value per user metric

Toncoin is facing a re-estimation of its market price, based on the value per user metric. The TON token has survived multiple market shakedowns, often going against the market. Questions were raised on the real support for TON’s market price. 

TON tokens may be overvalued, based on a metric that maps users onto the fully diluted market capitalization. For that reason, the TON token is overvalued compared to Ethereum (ETH). Toncoin users are valued at $120K in market cap, while ETH users measure at $100K, speaking of the potentially inflated value of TON.

The doubts about the token’s performance come at a time when the Toncoin and Telegram communities bet on the price expanding as high as $10. 

What holds TON together now are some incentives to not sell, including the potential to farm airdrops. TON is also circulating in the advertising economy on Telegram, and may be needed for some of the hottest Telegram games. Skepticism about TON arrives at a time when clicker games, airdrop farming and other mini-apps are taking off on Telegram. 

In the short term, TON closed in on losing its 50-day moving average, sparking predictions of a correction under $5. The short-term price prediction does not depend on overall market performance, as TON operates on a different set of price factors. 

Data from Coinglass also puts TON in the overbought category, ahead of all other overbought coins and tokens. 

$SOL Market Value per user is at around $4.1K while $ETH Market Value per user is at around $100K..the gap is at around 24x..also $TON market value per user is at around $120K..that's overvalued as compare to $ETH right now.

more analysis below 👇

data source: @dyorcryptoapp pic.twitter.com/h8yVroMc5l

— hitesh.eth (@hmalviya9) July 25, 2024

TON performance hinges on Notcoin (NOT) adoption

One of the questions for TON and its ecosystem is whether the price action is organic. TON benefitted from the overall positive performance of Notcoin (NOT), the airdrop token that onboarded new users to Telegram. NOT is an entry point for newcomers, and the Notcoin channel is still highly popular. 

NOT also gets a boost from its Binance listing, where TON has failed to secure trading pairs. One of the reasons for the price weakness of TON may be a shift to NOT trading, causing a trend continuation and a new bullish cycle. With the popularity of NOT tap-game, the asset may divert the traders from TON. 

TON relies mostly on activity on OKX and Huobi, with more than 91% against Tether (USDT). Toncoin apps are also highly active, storing more than $750M in value locked. Additionally, the Toncoin chain carries more than $610M in both native and bridged USDT. 

The TON market, centralized and responsive to USDT inflows, ensures the current performance of the asset. The question remains, however, whether TON will be capable of reaching Solana’s valuation and influence, or slide further. 

Toncoin and its ecosystem are also just entering the top 10 narratives in crypto, looking both promising and raising doubts. According to Coingecko data, TON ecosystem is now a small but notable narrative that can translate into price action. The problem is that TON is not easily accessible for Western buyers, except for gaining the coin from Telegram groups, channels or games.

Toncoin ecosystem releases W5 smart wallet

The goal of the Toncoin ecosystem is still to onboard newcomers to holding coins and tokens. To achieve wide adoption, Toncoin has launched the W5 smart wallet, which will be able to batch transactions and achieve gas-free transfers. 

While gas-free transactions may be beneficial and onboard more users, this will also decrease demand for TON. The smart wallet will also allow the payment of fees in native USDT or NOT. 

Toncoin claims to have 950M potential users, in addition to the estimated 1.5B registrations on Telegram. TON still carries more than 400K daily active users, this time lagging after Ethereum (ETH). 

The biggest problem for Toncoin is to build up the legitimacy of its network. Currently, scams and legitimate projects are mixed on the same platform. Beyond the well-known games like Hamster Kombat and Catizen, some of the new assets include honeypot tokens. 

Airdrops and tap-mining remain active as a tool to onboard users. However, not all tapping quests are viable. Currently, the Notcoin project remains the most visited, though more detailed play-to-airdrop games are trying to compete. For now, TON has survived multiple accusations of being a scam token, and has built up its liquidity, but Toncoin ecosystem users may still face scams targeting their wallets or trying to sell fake tokens or NFTs. 

Cryptopolitan reporting by Hristina Vasileva