Toncoin’s Resilience Amid Market Downturn and Trading Challenges

Toncoin Faces Downtime but Shows Resilience

Recently, Toncoin (TON) experienced a significant moment in its trading history, managing to recover some of its losses after enduring nearly five hours of downtime. This interruption was partially attributed to the overwhelming popularity of the DOGS airdrop, a campaign initiated by the Ton Foundation to raise awareness regarding the controversial arrest of Pavel Durov. Despite the challenges, it was not a ‘dog day afternoon’ for the native token of the protocol.

As the trading day unfolded in East Asia, TON managed to limit its losses, now sitting at just under 1%, as per CoinDesk Indices data. In stark contrast, the CoinDesk 20 (CD20), which tracks the largest and most liquid digital assets, suffered a decline of over 6.5%. This downturn was primarily driven by a market slide led by bitcoin (BTC) that resulted in over $300 million in liquidations within the crypto futures market, marking the most significant drop since August 5.

Bitcoin witnessed a 6% decline, while other major cryptocurrencies like ether (ETH), Solana’s SOL, Cardano’s ADA, and dogecoin (DOGE) each fell by more than 5%. However, XRP (XRP) displayed relative strength with a smaller decline of 3.4%, and Tron’s TRX emerged as the least affected major asset, showing only a 2% dip.

Ether futures reported the highest level of liquidations at $102 million, closely followed by bitcoin futures at $96 million, with a collection of smaller alternative tokens accounting for an additional $40 million. The sudden wave of liquidations likely triggered a long squeeze, a phenomenon where traders, who anticipated rising prices, are compelled to sell during a market downturn to mitigate losses, thus fueling a downward spiral.

According to CoinGlass data, the open interest in bitcoin futures has dropped to $31 billion from $34 billion earlier in the week, indicating a shift in trader sentiment as prices fell. Open interest reflects the number of unsettled futures contracts and serves as a barometer for whether new capital is entering or exiting the market.

This market downturn coincided with U.S.-listed bitcoin exchange-traded funds (ETFs) experiencing net outflows of over $127 million on Tuesday, breaking an eight-day streak of inflows. In a continued trend, ether ETFs faced their ninth consecutive day of outflows, with more than $3.45 million leaving these investment vehicles.

“The recent outflows from BTC ETFs amounting to a substantial $127 million suggest that traders are taking profits following the Jackson Hole rally,” stated Augustine Fan, head of insights at the on-chain financial products provider SOFA, in a Telegram message. “In contrast, ETH is stuck in a downward spiral, facing its ninth consecutive day of outflows, as the Ethereum mainnet grapples with an ongoing identity crisis.”

Fan added, “Traders are now seeking short-dated volatility, scrambling to acquire downside protection (puts), as the overall market momentum remains weak due to supply overhangs and a lack of immediate on-chain catalysts.”

In a related development, AI tokens are also under pressure, despite the anticipation surrounding Nvidia’s potential blockbuster earnings, which had initially attracted some investor interest in AI-related assets. For instance, NEAR has dropped by 10%, according to CoinDesk Indices data, while ICP has decreased by 6.5%. Other tokens such as FET, Bittensor’s TAO, and RENDER (RNDR) have seen declines of 11.8%, 11.3%, and 9.5%, respectively.

“The sentiment surrounding AI has undoubtedly shifted,” noted Katie Stockton, founder and Managing Partner of Fairlead Strategies, in a recent interview on CoinDesk TV. “Despite the fluctuations in Nvidia’s stock, the upcoming earnings report holds significant sway over the market. This situation could either propel the market upward prior to a potential September correction or initiate that correction now.” She elaborated, “We anticipate that Nvidia and other mega-cap stocks will enter a more range-bound phase, marked by heightened volatility, regardless of their AI exposure.”

Meanwhile, in a positive move for the industry, Hong Kong-based custodian Hex Trust has launched a staking partnership program, providing clients with enhanced access to staking offerings. This initiative signifies a sustained institutional interest in the cryptocurrency asset class.