Toncoin’s Metcalfe Valuation: Is the Crypto Undervalued?

• TON dropped 11% to $5.12 amid Pavel Durov’s arrest, lowest since May 1.
• Metcalfe valuation suggests TON might be undervalued with strong network activity.
• Technical indicators show bearish momentum, with potential for further price decline.

Toncoin (TON) has experienced a decline in value following the arrest of Telegram’s Founder and CEO, Pavel Durov, in France. On August 26, TON’s price dropped by 11%, closing at $5.12, the lowest level recorded since May 1. The decline raised questions about the currency’s future but may also present a strong risk-reward situation for investors.

TON had previously reached an all-time high of $8.17 on June 14. However, the recent fall to $5.12 marks a downturn for the currency. Even with this decline, the current price of $5.37 places TON closer to the lower band of its Metcalfe valuation, which currently stands at $4.60. The upper Metcalfe valuation band, meanwhile, is set at $18.40.

Source: CryptoQuant

The Metcalfe valuation bands, calculated based on the number of active unique addresses on the TON network, provide a way to assess TON’s value in relation to its user base.

Interestingly, the TON network saw a record high of 1.93 million active addresses on August 28, indicating strong user engagement even with the recent price decline. 

With TON nearing the lower Metcalfe valuation band, it appears the currency may be undervalued compared to its network’s activity, potentially providing a favorable investment opportunity.

However, Toncoin’s price movements show that bearish sentiment is more common. The price momentum indicator, Moving Average Convergence Divergence (MACD), is below the signal line and steadily heading downwards.

This downward movement follows the downtrend of the MACD histogram, which strengthens the bearish argument as the volume of the bearish bars of the MACD histogram increases.

Source: TradingView

Additionally, the Relative Strength Index (RSI), which measures the speed and change of price movements, is currently near the 40 mark. This position suggests that TON is neither oversold nor overbought but is leaning toward a weaker market position. 

The combination of these indicators points to the likelihood of continued downward pressure on TON’s price unless a significant reversal pattern emerges.