Lighter: Why LIT’s $3 target faces THIS test despite institutional demand

Lighter’s [LIT] institutional activity continued to grow, with one institution depositing 3.35 million LIT valued at about $7.83 million into Lighter.

According to Onchain Lens, the institution had withdrawn most of those holdings from centralized exchanges during the previous week.  In particular, the institution removed 2.92 million LIT from OKX and another 468,620 LIT from Bitstamp.

Consequently, the movements reduced the institution’s exchange-held supply before its heavy Lighter deposit. The transaction, however, did not necessarily indicate a firming up of overall market demand. To sustain a recovery, spot buyers and general trader involvement were needed.

Spot inflows challenge the bullish narrative

Despite the institutional positioning, LIT saw the Spot Netflows turning positive at around $609.78K as of press time.

The positive reading implies more inflows than withdrawals during the measurement period. As a result, this added more immediate selling pressure against the bullish scenario, thus creating some selling opportunities.

Importantly, this flow contrasts with the previous withdrawals from OKX and Bitstamp. But overall, the institutional activity curtailed holdings on those exchanges, and later, overall spot flows turned to net deposits.

Thus, there was a significant absorption test for demand at the prevailing price. If buying increases, it will offset the $609.78K inflow and keep LIT’s recovery structure in place. If the netflows remain positive, however, the exchange supply would be raised and could limit the upside potential.

Binance traders keep leaning heavily long

While the bulls were kept in check by oversold sentiment, derivatives positioning favored them, with Binance’s top traders showing a high level of long exposure.

According to CoinGlass analytics, Binance’s top traders accounted for 70.1% long positions and 29.9% short positions. At the time of writing, these figures translated to a Long/Short Ratio of 2.34, which was a sign of greater bullish positioning.

The positioning complemented the institutional activity by showing how whales had retained expectations for higher prices. However, the heavy long concentration also raised sensitivity to failed upside attempts around the resistance zone.

A price rejection will likely put pressure on overcrowded longs and reduce the demand of leveraged participants. Moreover, bullish sentiment remained much higher than bearish sentiment, provided the 70.1% long position remained.

Can $2.23 protect LIT’s breakout structure?

At press time, LIT traded near $2.302 after retreating 2.50%, leaving the price between $2.23 support and $2.431 resistance on the TradingView daily chart.

The pennant breakout structure remained intact as ENA price defended the $2.23 support zone. However, the weakening RSI reading introduced caution before another resistance challenge. The indicator reached 52.64, while its moving average stood higher at around 54.59. 

Nevertheless, the indicator was still sitting in the positive territory, though trending downward amidst the subdued buying activity over the consolidation period.

A solid move above $2.431 would solidify the breakout and may create a chance to move higher to $3.00. Such a move would require buyers to absorb exchange inflows while maintaining the current institutional and derivatives support.

Alternatively, losing the $2.23 support would weaken the breakout structure and expose the $2.00 price level. Hence, price confirmation remains necessary before the bullish positioning translates into sustained price expansion.

Final Summary

• LIT’s institutional activity and 70.1% long positioning continued to favor the bullish side.

• Holding above $2.23 and reclaiming $2.431 could strengthen LIT’s path toward $3.00.