Litecoin (LTC), a leading cryptocurrency, is currently experiencing consolidation, with prices trading within a narrow range. However, there are signs of a recovery breakout, with an analysis of market conditions, technical factors, and expert forecasts to determine the likelihood of LTC’s recovery.
The Impact of the Litecoin Halving Event
Litecoin underwent its third halving event on August 2, 2023, which reduced block rewards for miners from 12.5 LTC to 6.25 LTC. As expected, the price of LTC declined significantly following the halving. However, recent on-chain indicators suggest that LTC may have reached a turning point.
Unusually Large Buying Activity by Long-Term Investors
Glassnode’s data reveals that long-term investors on the Litecoin network have been buying unusually large amounts of LTC since October 5. The net-inflow metric, which measures the daily increase in LTC coins held by investors for at least a year, shows a significant accumulation trend. Between October 13 and October 17, long-term holders added at least 400,000 LTC to their cumulative balances. This is the most significant increase since June 2021.
Litecoin Historical Trends and Price Impact
An examination of historical trends shows that when net inflows from long-term holders exceeded 400,000 LTC, LTC prices increased by at least 25% within the next 30 days. This bullish scenario occurred in October 2020, June 2021, and February 2022. If history repeats itself, we can expect a retest of the $76 price level in the coming weeks.
The Role of Short-Term Traders
While long-term investors have shown confidence in the recovery of LTC, short-term traders remain cautious. Aggregate data from major crypto exchanges indicates that sellers still dominate the market. The overall order book shows that there are more sell orders for LTC than buy orders, indicating that day traders are not convinced of a price correction.
The Potential for Short-Term Price Correction
Despite the scepticism of short-term traders, the continued buying activity of long-term holders may eventually sway market sentiment. If long-term investors persist in accumulating LTC, it is only a matter of time before day traders display their confidence in the recovery mission. This could lead to a short-term price correction.
Litecoin Price targets and resistance levels
From an on-chain perspective, the Litecoin price is poised to surge at least 25% and reclaim $75, as seen in previous instances where net inflows exceeded 400,000 LTC. However, there is a significant sell-wall at $65 that presents a major obstacle to reaching the $75 level. This sell-wall was created by the largest group of LTC investors, who bought at the maximum price of $65.19.
Potential bearish scenarios
While a bullish recovery is possible, it is important to consider potential bearish scenarios. Bears may push for a reversal of the LTC price below $50, which could trigger a downward trend. However, there is a possibility of an initial buy-wall at $52, where a significant number of addresses bought LTC at the minimum price of $0.52. If the bears break through this support level, the price of LTC could drop to $50.
Conclusion
Litecoin (LTC) is showing signs of recovery from consolidation, with increased long-term investor buying and historical trends suggesting it may surpass previous price levels. However, short-term traders remain cautious, and market sentiment can change rapidly.
