TON, as a blockchain network, is facing liquidity strain, a trend that might impact its price stability and general ecosystem health if left unchecked
CryptoQuant analyst Steve Moodley recently shared insights into current liquidity dynamics on The Open Network powering Toncoin (TON). Moodley pointed out certain forces that could affect Toncoin’s liquidity following the recent surge in the network.
Toncoin’s Short Liquidity Squeeze
Moodley shared his thoughts on CryptoQuant’s Quicktake, stating that data on TON’s circulating supply and market capitalization indicate a high network performance. He attributed TON’s performance to its collaboration with the Telegram messaging platform. The network has experienced notable growth since August 2021.
The analyst, however, foresees a liquidity squeeze on TON due to variations between market capitalization and circulating supply. Current CoinMarketCap data shows TON has a market capitalization of $14.2 billion, while the circulating supply is at $2.5 billion.
According to Moodley, the difference between market cap and circulating supply indicates that tokens are locked or held long-term, impacting liquidity. This means fewer tokens will become available for traders and investors.
As a result, the analyst suggested implementing TON’s hybrid monetary transmission model. Typically, this model incorporates different policy instruments to achieve a specific goal, such as price stability. However, Moodley noted a general correlation between market capitalization and circulating supply.
“A divergence between market capitalization and price could signal that the token is being valued differently from its fundamental metrics. Conversely, a closer alignment suggests a more rational market valuation,” Moodley concluded.
The Growth of the Toincoin Ecosystem
Toncoin has become a major force in the crypto and blockchain ecosystem. Currently ranked the 9th-largest digital asset by market cap, TON has reached over $760 million in Total Value Locked (TVL).
As of this writing, TON has surged 0.9% to trade at $5.62 in the past day. The 24-hour trading volume also increased by 14.5%, suggesting increased interest in the token.
As BGECrypto reported earlier, analysts forecast more increases for TON in the coming days. Positive sentiments in the Toncoin ecosystem are being encouraged by the rising adoption of Telegram mini-game applications like Notcoin (NOT) and DOGS (DOGS).
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