TON and Telegram narrative may be overvalued according to new research

The Telegram narrative for Toncoin (TON) has gained relevance among market participants, as TON price rallied nearly 20% in June on the OKX exchange. However, a new analysis from Blockworks Research suggests that TON and the Telegram narrative may be overvalued.

On-chain data shows TON traders have consistently realized gains on their holdings this week. 

TON is trading at $7.605 on OKX, at the time of writing. 

TON and the Telegram narrative, is it overestimated?

Data from Blockworks Research shows that the TON and Telegram narrative has gained popularity among traders. According to the report, market participants are betting on TON to be the next Solana (SOL) or Ethereum (ETH) this cycle. 

Analysts argue that the market has likely overestimated Telegram’s distribution, TON’s non-compatibility with the Ethereum Virtual Machine (EVM), and the underlying programming language. 

While the messaging app has a global reach and significant Monthly Active Users (MAUs), the number of Daily Active Users (DAUs) is relatively low compared to other platforms. This signals low penetration and a less monetizable userbase than the market appreciates.

DAU/MAU ratio for social media applications 

Additionally, the TON ecosystem is not compatible with EVMs and its native programming language does not have as significant a community as others like Solidity and Rust. Analysts at Blockworks Research have cited these reasons to conclude how the demand for the platform, its usage and market share is likely overestimated. 

The Telegram narrative likely catalyzed nearly 20% gains in the TON price in June. Drawing parallels between Telegram and WeChat, analysts explain that WeChat is served only in China and the US market is dominated by tech giants. Therefore, Telegram could face several challenges to grow further in terms of users and market share in the US. 

The report reads:

Despite these realities, TON is priced for tremendous growth, leaving new investors with little margin of safety.

TON traders took profits all week

TON investors have realized gains on their holdings since June 22, nearly all week. The positive spikes in Santiment’s Network Realized Profit/Loss metric show traders’ profit-taking activities. TON has sustained 20% in gains in June despite holders realizing gains on their assets. 

TON Network Realized Profit/Loss vs. price

TON hit its monthly high of $8.288 on June 15, currently trading nearly 9% below that level.