Can Litecoin [LTC] recover on the back of demand amid strong headwinds
Litecoin, although it may not have been the preference of every investor, it has still been one of the altcoins in the market with the highest rate of adoption.
And since that is all Litecoin has to offer, given the absence of DeFi capabilities, adoption is precisely what will save the coin from vanishing out of existence.
Litecoin sees white again
Usually, to connote a fall in price, it is said that the coin is seeing red, but Litecoin is seeing white because the recent fall in price has thrown the altcoin back into the downtrend that has been tormenting the coin for over 11 months now.
After a failed escape in November, Litecoin attempted another one again last month. For the most part, it seemed to have been successful as LTC in the same duration tested the critical level of $123 as support.
However, the 9% plunge of 6 April resulted in a return to this downtrend wedge which is narrowing with every passing day.
At the time of writing, LTC has tested the upper trend line as resistance, but if it does not break out soon, it could be testing the lower trend line as support at $102.59.
Now a recovery from this is difficult since the price indicators are certainly against the possibility of that happening. Moreover, even investors might plan on pulling themselves away from the market.
Litecoin has not been changing hands too frequently recently, as verified by the velocity of the asset.
This may also be because for the last few days, on-chain transactions in loss have been exceeding transactions in profit. The market observed a similar pattern when Litecoin was treading around the $103 mark at the beginning of March.
Although the coin does share a high correlation (0.95) with Bitcoin, leaving the door open for a gradual recovery should the king coin not fall further.
As it is, LTC has already lost the support of both the 50-day SMA (blue) and the 100-day SMA (pink), and if they continue hovering above the candlesticks for much longer, Litecoin might end up falling through the downtrend wedge, lower trend line. (ref. Litecoin Price Action image)
The following week will be crucial in defining that, as the coin might also receive support from the multiple significant ecosystem developments it has seen in the last few days.
Ranging from Robinhood’s 20 million crypto wallets activation to the creation of the Cryptocurrency Research Lab from the Litecoin Foundation and the inclusion of Litecoin in the addition of 11 new, non-tradable CME CF Cryptocurrency Reference Rates and Real-time Indices, Litecoin certainly has a lot of demand in the market.
Derivatives giant @CMEGroup will offer reference rates for 11 cryptocurrencies including Litecoin⚡
These new benchmark indices from @CFBenchmarks are an important prerequisite for crypto ETFs and to allow traders and institutions to manage price risk. https://t.co/dN5UZsHqQK https://t.co/YQhzvHrd63
— Litecoin (@litecoin) April 9, 2022