Toncoin (TON) has been one of the best-performing crypto assets in recent times, gaining by over 221% since the start of 2024. The Telegram-integrated token has particularly caught the attention of many investors, after securing a spot in the top 10 cryptocurrencies according to market cap. However, amidst TON’s purple patch, a certain technical indicator has sounded the alarm for a potential decline in the coming weeks.

Adjusted Sharpe Ratio Indicates Overvaluation For TON: Analyst

, an analyst on data analytics platform CryptoQuant, the comparison of TON’s Adjusted Sharpe Ratio to volatility reveals that the asset’s 7-day volatility has consistently surpassed its 30-day volatility over the past two and a half years.

For context, the Adjusted Sharpe Ratio is used to calculate the excess return of an investment relative to its risk, however with the consideration of additional factors that may affect the risk-adjusted return, thus providing a more nuanced measure of an asset’s performance. 

Data from TON’s Adjusted Sharpe Ratio versus volatility analysis indicate that Toncoin experiences more frequent and significant short-term price swings compared to its long-term price movement, thus implying the asset is highly sensitive to short-term events.

Moodley attributes the cause of such volatility to the speculative nature of TON as well as the rising numbers of Telegram users in DeFi and GameFi, thus forcing the significant volatility to occur at a “fundamental level”. 

However, according to the current 180-day Sharpe Ratio analysis, TON’s price could have attained a level of fatigue. Therefore, the recent profits from the assets may not be sustainable with a potential price drop expected in the “near term”.

Given this market analysis, short-term traders are expected to capitalize on this volatility which may prove profitable but is a highly risky strategy. However, long-term investors should consider that TON’s price movement over an extended period is considerably lower and stable as observed from data from the 30-day volatility metric.

Toncoin Price Overview

At the time of writing, Toncoin is trading at $7.38 following a 3.36% decline in the last day. However, the token presents a positive performance on larger time scales with an impressive 17.64% gain recorded over the last seven days. TON’s daily trading volume is also on the green side having risen by 11.57% and is currently valued at around $402.12 million. With a market cap of $17.96 billion, TON ranks as the ninth largest crypto asset.