Toncoin (TON) took a major hit, losing over 25% in value following Telegram founder Pavel Durov’s arrest on Aug. 25. That included a decline to a low of $4.45 on Sept. 6, followed by a swift 15% rebound to above $5.15 by Sept. 9.
Despite the recovery, a technical indicator suggests that Toncoin may be at risk of continuing its prevailing downtrend.
TON price risks 30% decline in September
TON’s ongoing price recovery is part of its inverse cup-and-handle pattern, characterized by the formation of a rounding top followed by a period of consolidation.
The inverse cup and handle is a bearish continuation pattern; it typically resolves when the price breaks below the common neckline support and falls by as much as the maximum distance between the cup’s peak and neckline.
On Sept. 3, the TON/USDT pair entered the pattern’s breakdown stage after slipping below its neckline support of around $5. A week later, its price was testing the same neckline as resistance.
TON/USDT daily price chart. Source: TradingView
Retaking the neckline as support will likely invalidate the inverse-cup-and-handle pattern. However, a successful retest, where the price fails to move back above the neckline, confirms that the previous support has flipped into resistance, signaling that sellers are still in control and the breakdown is likely to continue.
In that case, TON’s downside target will likely be around $3.60, down approximately 30% from the current price levels.
Crackdowns against Telegram, Durov intensify
The bearish outlooks for Toncoin have intensified further due to its association with Telegram and Durov, primarily in the light of an ongoing global crackdown against the messaging app service.
For instance, South Korea has joined the global crackdown on Telegram, investigating the platform for facilitating deepfake crimes. India, Telegram’s largest market with over 100 million users, also initiated a probe shortly after Durov’s arrest reports surfaced.
Indonesia is considering blocking the platform due to inadequate content moderation. Meanwhile, the European Union has been reportedly investigating Telegram for allegedly providing false user data.
Related: Toncoin hits $13.96B market cap amid Durov debacle
Negative sentiment around these legal challenges could continue to weigh on TON's price, as investors may anticipate further market instability or distancing from the project.
However, TON whales seem unfazed by the negative coverage. Santiment data reveals a rise in the TON holdings of its richest investors—those with a 10 million—100 million token balance (brown)—following Durov’s arrest.
TON supply distribution among whales. Source: Santiment
Furthermore, the total-value-locked (TVL) across the TON ecosystem has increased during the September price decline, helped by the launch of gaming and memecoin projects—like DOGS—on its network.
TON Blockchain TVL. Source: Defi Llama
So, the underlying Toncoin ecosystem continues to attract users and developers, which could help counterbalance the headwinds in the longer term.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.