Litecoin [LTC] momentum weakens – but is a reversal likely
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- LTC dropped below its rising channel.
- LTC’s price consolidation could persist into the weekend but change early next week.
Litecoin [LTC] hit rock bottom of $61 in December 2022 but rallied to $93 in January 2023, posting about 50% gains. The January rally followed Bitcoin’s [BTC] impressive performance as it jumped from $16k to $23k.
Read Litecoin [LTC] Price Prediction 2023-24
At the time of publication, LTC’s value was $87.23, with fundamentals suggesting an almost neutral structure. LTC could fluctuate and consolidate within this range into the weekend before a definitive price action after next week’s FOMC (Federal Open Market Committee) announcement.
LTC’s price consolidation could extend briefly in the $82 – $93 range
LTC’s uptrend since late December 2022 chalked a rising channel (white). But the bullish momentum faced two key challenges. The first challenge occurred around mid-January after an extended price consolidation temporarily pushed LTC out of the rising channel. The $82.44 support level held the drop and helped LTC recover and retest the channel’s mid-line around the $90 level.
The second challenge followed after LTC faced price rejection at $92.27, leading to a correction that saw the asset drop below the rising channel. LTC has been fluctuating between $87.23 and $92.27 for the past seven days. The above price consolidation could persist into the weekend and change early next week, depending on how BTC reacts to the FOMC release.
A likely bullish BTC could see LTC break above the $92.27 level and move back into the rising channel. Such a move could push LTC into the $100 zone.
But a bearish BTC would see LTC drop below $87.23 and retest the $82.44 support, invalidating the forecast described above.
LTC’s RSI value was 53 on the 12-hour chart, with possible rejection and rebound from the mid-level of 50 based on historical patterns. Therefore, LTC’s consolidation could continue into the weekend.
LTC’s open interest fluctuated as holders’ profits declined
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As per Coinglass’ data, LTC’s open interest (OI) rates declined around mid-January before fluctuating afterward. However, at press time, LTC recorded a gentle rise in OI, showing that more money was moving into its futures market – a trend that could boost its uptrend momentum.
On the other hand, price fluctuations cut down holders’ profits. According to Santiment, the 30-day MVRV declined from 20% to 6%; thus, short-term holders’ profits dropped by over 10%. The drop also saw investors adopt a somewhat bearish outlook, as evidenced by the negative sentiment.