Why Toncoin Price May Face a Short Squeeze

Toncoin’s (TON) price has remained relatively stable over the past week. Trading between $5.96 and $5.37, the altcoin has maintained this range despite broader market fluctuations. 

However, this trend may soon be disrupted as two key on-chain metrics point to a potential short squeeze. This analysis explores what TON holders should anticipate as this unravels. 

Toncoin Is at Crossroads

A short squeeze occurs when a sharp rise in an asset’s price forces traders who have bet against a cryptocurrency by taking short positions to buy it back at higher prices, further driving it up and increasing market volatility. In a new report, CryptoQuant contributor Joao Wedson noted that the combined reading of Toncoin’s 30-day open interest delta and its negative funding rate signals that the altcoin may be headed in that direction.

“This can be interpreted as a sign that investors are betting on an upward price trend for TON, as they are willing to hold their positions rather than liquidate them. This increase in confidence can be a precursor to ascending price movements, especially if accompanied by growing volumes,” the researcher said.

Toncoin’s open interest delta measures the changes in its open interest over a set period. It helps traders determine whether new money is entering the market or if existing positions are being closed. 30-day open interest delta recently turned positive, indicating increased market activity.

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However, while Toncoin’s open interest delta is positive, its negative funding rate across cryptocurrency exchanges presents an interesting situation that may impact Toncoin’s price in the near term. 

Funding rates are periodic fees to ensure an asset’s contract price stays close to its spot price. A negative rate indicates that traders are paying to keep short positions open, signaling a bearish outlook. 

A combined reading of these metrics presents a situation in which, on the one hand, investors are confident that Toncoin’s price will continue to rally, while on the other, many traders still expect the price to fall. According to Wedson, this scenario could result in a “potential short squeeze, a shift in sentiment, and increased volatility.”

TON Price Prediction: Uptrend Is Strong, But There Is a Catch

Toncoin is currently trading at $5.88, with its Aroon Up Line showing a strong uptrend at 92.86%. This indicator, which measures the strength of a price rally, suggests that Toncoin’s recent high was reached not long ago.

When the Aroon Up Line approaches 100%, it signals a robust upward trend.

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If Toncoin’s rally continues, it could gain 51%, pushing its price past the key resistance formed at $8.02 at securing the new all-time-high. However, if market sentiment turns negative, Toncoin’s price could drop to $4.44, negating the current bullish outlook.