Following our initial report focused on keeping you and your assets safe in times of elevated global security risks, some of you might ask what’s ahead now for TON, the cryptocurrency designed, launched and utilized by the Telegram messenger platform.
The numbers
While the TON price has come under pressure and lost more than 30% versus its recent early summer high following the arrest of Telegram founder Pavel Durov, it remains for the time being one of the more successful mid-term investments one could have done for the past year.
Even compared to the BTC benchmark, TON has held up fairly well over the past two years – a mark of distinction that few cryptocurrencies of note can claim.
The panic and ensuing uncertainty following Durov’s arrest have led to a flight from TON, with investors preparing for further risk of value erosion.
The “speculative air” might be leaving the room as uncertainty looms over the future of Telegram and Durov, who are currently in the crosshairs of—especially, but not only—Western regulators.
Given the impressive run from around $2 to over $8 during 2024, many TON investors seem to anticipate further downside.
One indicator of this is the rapid unstaking of TON in the BitcoinVN TON staking vault, resulting in a currently outsized APR of over 100%.
Many investors are no longer willing to hold TON, perceiving serious downside risk that outweighs the 100%+ APR they could earn on TON.
Purely based on the numbers, this rationale can make sense: If the anticipation is that TON will drop from its current level of close to $6 back to $2, that would represent a loss of approximately 67% of invested capital (measured in USD).
For example, if you invested $6,000 in TON (and acquired 1000 TON), the value of your investment would decline to $2,000 (1000 TON at $2 per TON) if such a mean reversion were to occur.
Even if you “earn” 100% annually via staking and double the amount of TON in your portfolio through this strategy, you would still only hold TON worth around $4,000 (1000 TON at 100% APR = 2000 TON; but 2000 TON at $2 per TON = $4,000).
This strong bearish sentiment might be justified, so proceed with caution if you’re considering investing some of your capital into TON.
The fundamentals
First off, TON is highly dependent on Telegram and its small team to maintain its value.
It is both highly centralized and heavily reliant on the Telegram team’s ability to continue executing effectively.
If Telegram were to be hampered or dismantled in the coming years, the entire investment thesis would likely collapse, and the value of $TON could crumble to dust.
This makes it a VERY RISKY investment, and it is not recommended for anyone who isn’t a professional investor with sufficient capital to absorb potential losses.
On a pure risk-reward basis, saving and securing your Bitcoin is likely a better option in the long term to maintain and grow your purchasing power.
Now that these disclaimers are out of the way, what are some of the fundamentals that might make you consider allocating some of your capital to TON if you’re seeking to take a risky bet?
First off, Telegram is potentially the most successful messaging platform of the past decade, with over 1 billion users globally and widespread use in nearly every country on the planet.
For many “international” users, Telegram has become the messenger of choice, offering convenience where more localized messaging apps encounter national or regional limitations due to regulation and network effects.
Yes, we acknowledge that Telegram may not be the best option for privacy-conscious users, and other niche solutions might be superior – but when it comes to sheer distribution numbers, the quantitative success of the Telegram team’s strategy is undeniable.
A strong execution track record and a vast distribution network provide a compelling backdrop for considering a bet on the $TON cryptocurrency.
There are very few individuals in the world today who have had an impact at the scale of the Durov brothers.
As long as the Telegram app remains as popular and ubiquitous as it is today, TON is likely to remain one of the top cryptocurrencies with actual market demand from users.
The ability to procure private Telegram accounts without the need to tie them to your actual phone number or SIM card provides enhanced security for Telegram users.
The going rate for such a private handle or number on the marketplace Fragment.com is currently 100 TON or more, equating to upwards of $500 per number.
The demand – driven by users and speculators who bet on the continued or rising significance of the Telegram messenger – could crater if a global crackdown on Telegram halts its ongoing success and drives users to alternative messaging platforms.
On the positive side, however, TON and the Telegram team have secured some major partnerships within the crypto ecosystem in recent months.
These include a significant partnership with Tether, the world’s leading stablecoin, to transfer USDT via the TON protocol, as well as a listing of TON on Binance, the world’s largest cryptocurrency exchange, just a few weeks ago.
The future of Telegram
Now, the situation has become very uncertain.
It is evident that Telegram and its founders have recently come under intense scrutiny from regulators and governments worldwide, aiming to gain control over or stifle the platform and its reach.
If these efforts succeed – and with the capture of Durov, they have some strong leverage – the future of TON, which is closely tied to the success (or failure) of the Telegram ecosystem, is in question. This makes any capital allocation towards TON a high-risk investment.
Given the current situation, unless you can afford to lose the money, it may be wise to refrain from investing a significant amount of capital in TON.
The currently high yield available on TON in the BitcoinVN staking vault might offset some of that downside risk. However, it also clearly indicates that many investors perceive substantial downside risk in having capital at risk with TON.
