Lighter: 3 reasons why LIT’s price hit $5.30 before retracing again

Lighter’s [LIT] price action has been interesting lately. Within a recent 24-hour period, LIT climbed by double-digits and hit a new local high of $5.30. This, on the back of the token gaining by over 50% in just 7 days as buyers fought back control.

And yet, at press time, the opposite was happening, with LIT down by 6% on the charts.

It’s still worth looking at the aforementioned surge though. Three main factors stood out. What were they?

A look into LIT’s staking, buybacks, and volume

Market participants moved tokens from CEXs to LIT staking addresses.

For instance, over 140K were bought from OKX and Bybit and all withdrawn to one address. The exact sum was bridged to Lighter, and the whale’s staking portfolio passed 6.598 million LIT, worth $31.63 million.

In total, over 110 million LIT were staked, representing 44.2% of the circulating supply.

On the same note, the DEX allocated 11 million tokens for farming rewards, improving its network activity.

Moreover, buybacks created scarcity too. Since TGE, the Lighter protocol has bought back 17.50 million tokens, representing 7% of the circulating supply.

At the same time, the altcoin’s Open Interest (OI) crossed $1 billion, indicating that traders were aggressively buying LIT’s Futures contracts. The monthly trading volume of August also surpassed $39.5 billion, reinforcing the spike in activity.

This volume spike was partly driven by Lighter‘s integration into Robinhood Chain.

Lighter hits new ATH, surpasses $5 valuation

Amid these bullish factors, the altcoin made a new peak above the $4.90-$5 zone. The same zone was also the neckline of an inverted head-and-shoulders pattern, with the shoulders sitting above the 20 SMA.

Even the Bollinger Bands, which were starting to tighten, opened up, indicating heightening volatility.

Additionally, the Technical Ratings indicator reinforced a bullish bias. The indicator signaled a strong buy for daily and weekly timeframes, while a sell signal appeared for the 6-month period.

And yet, soon after hitting its new high, LIT’s price retraced on the charts. The altcoin lost its previous peak level as support, putting the altcoin under bearish stress.

Such an outcome was also made probable due to profit-taking from whales.

Final Summary

• Lighter rallied by more than 10% in 24 hours, before retracing by another 6% in the next 24 hours.
• LIT’s price hit a new peak value above $5, but sellers soon wrestled back control.