After the losses seen in the first week of May, Litecoin bulls have done well to power another Litecoin rally that saw prices climb from $76 to $92 within two weeks. The larger picture showed that the $90-resistance is only a small obstacle for LTC bulls. Litecoin’s halving is set to happen in August, what can the price action from the previous halving event tell us? Here’s a Litecoin price prediction –
Read Litecoin’s [LTC] Price Prediction 2023-24
The rise in prices was accompanied by an increase in other metrics such as network activity and social performance. And yet, Bitcoin did not have a bullish bias over higher timeframes. And, this could hurt Litecoin’s performance in the coming months.
A brief examination of Litecoin’s current position on the charts
Source: LTC/USDT on TradingView
Litecoin traded within a range from $66 to $102 in 2023. At the time of writing, it had climbed past the second-highest volume node (highlighted by the yellow box) according to the Volume Profile Visible Range. The highest volume node, the Point of Control, lay at $76. It had been tested as support in early May.
Apart from moving above a strong resistance zone around the $88-region, the daily chart showed that the market structure had flipped bullish. This was accompanied by an RSI move above neutral 50, to underline the northbound momentum. The OBV also rose higher over the past week to signify that the gains were a result of demand from buyers.
The Value Area High (blue) at $97.5 and the range highs at $102 are likely to oppose Litecoin’s rally. The $104-zone was also a bearish order block on the daily timeframe that stretched back to 4 May 2022. A breach and retest of this area would highlight the likelihood of another rally with a target of $130-$135.
Realistic or not, here’s LTC’s market cap in BTC’s terms
To better understand how the market sentiment would be in the coming months, the previous LTC halving that happened in 2019 was studied. It suggested that Litecoin could rally until July before facing significant selling pressure.
What can we learn from Litecoin’s price action in 2019?
Source: LTC/USDT on TradingView
LTC’s halving in 2019 took place on 5 August. The price action charts showed that Litecoin investors began to buy LTC well in advance of the news. The 3-day market structure had been bearish until 4 January. The move past $36.51 on that day flipped the D3 market structure to bullish. This was followed by a surge in the RSI as Litecoin prices began to soar.
After 153 days, Litecoin rocketed to $146, posting gains of just over 400%. These highs came six weeks before the halving, and the bullish market structure was broken on the 3-day timeframe just three weeks before the news event.
This showed that buying right before the halving event could be a bad idea. If the same two-month lag were to happen, LTC prices could register new highs in June before beginning to descend. How high could LTC move though, bearing in mind the significant resistance that lies at $104?
Fibonacci extension levels showed a move to $135 is a possibility
Source: LTC/USDT on TradingView
In January 2019, after the bullish MSB, the impulse move up to $97 was followed by a pullback to $67 before another surge to $146. The $141-level was the 61.8% extension level based on the impulse move to $97 from $28. Similarly, after the bullish market structure break in early November 2022, LTC dipped to $47.6 before a move north to $105.7 by February 2023. This was not as clean as the surge in 2019, but there was a similarity.
If this similarity holds, and that is a big if, LTC can be expected to move upward to the $134 and $141-levels, which are the 50% and 61.8% Fibonacci extension levels. This could occur in June or early July before selling pressure sets in as the halving event looms closer.
This is an exercise in finding price action similarities and trying to set a timeline for where Litecoin could go on the price charts. Does the evidence at hand support our speculation?
On-chain metrics showed accumulation behind the scenes
Source: Santiment
The mean coin age began to trend upwards in mid-November 2022, but saw a huge drop in December. The uptrend continued till March, accompanied by the rally in LTC prices to $105. Since March, this metric has seen a huge decline despite the bulls defending the $80-$100 area.
In May, the mean coin age began to ascend once more, which highlighted another phase of accumulation. It is possible that continued accumulation and demand could spur Litecoin to climb above $105.
The MVRV ratio revealed that Litecoin had been undervalued during the recent drop to $80, but it has recovered since. The further the MVRV rises into positive territory, the greater the threat of a wave of selling from profit-taking Litecoin holders. Hence, this is another factor that traders can watch in the coming months.
Overall, there are similarities between 2023 and 2019, but they are not mirrored. Bitcoin saw a bear market rally from $3,500 to $13,500 in the first half of 2019. In 2023, the bear market rally of Bitcoin might already have ended. This, because of the failure to convincingly push past the $30k resistance area.
And yet, the resemblance between now and 2019 could see Litecoin find its yearly highs in the $130-$140 zone in June or July.
