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Toncoin’s Risk Exposure Ratio – Here’s why traders should look out for it

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Toncoin’s risk exposure ratio has been rising, signaling market confidence
Market indicators suggested TON could see a trend reversal and make gains

On the weekly charts, Toncoin [TON] made a moderate recovery on the price charts. During this period, the altcoin surged from a local low of $4.7 to a high of $6.09. However, over the last 3 days, the altcoin retraced somewhat though. In fact, at the time of writing, Toncoin was trading at $5.66 – A decline of 0.98% over the last 24 hours.

This, after the altcoin depreciated by 10.81% on the monthly charts.

This market volatility has left analysts talking. One of them is Cryptoquant analyst Joao Wedson, with the analyst noting a spike in TON’s risk exposure ratio – A sign of potential bullishness.

Toncoin’s risk exposure ratio rises

In his analysis, Wedson posited that TON’s risk exposure ratio currently suggests that the risk level within the Toncoin network is moderately high.

Source: Cryptoquant

According to him, the reason behind this uptick is that a significant portion of TON’s TVL has been allocated to various areas such as lending, derivatives, and options which are highly exposed to market liquidity risks.

As such, since Toncoin’s last major price rally, the risk exposure ratio has seen a sustained uptrend. This upward movement is a sign of rising capital inflows into leveraged financial products such as loans and derivatives.

Although this hike may bring stability concerns, it can also signify market confidence. A rising demand for derivates and leverages means growing market optimism – A sign of confidence in market trend and investors’ bullish sentiments.

However, over-leveraged networks can magnify losses during bearish trends. Thus, this aspect can be viewed positively by speculative traders who take the rising demand to capitalize on derivative markets.