Litecoin price is in a consolidation phase as investors wait for the next key catalyst. It is trading at $51.87, which is about 28% above the lowest level in June. Its market cap currently stands at $3.67 billion, making it the 21st biggest cryptocurrency in the world. At its peak, LTC was among the biggest coins globally.
Litecoin is a leading cryptocurrency that was created to address the challenges that bitcoin has as a medium of exchange. For example, Litecoin has a bigger supply cap than BTC. It is also significantly faster and its transactions are much cheaper.
LTC has a close correlation to bitcoin. Therefore, the factors that have pushed BTC to $20,000 are the same ones that have caused litecoin to plummet.
First, there is the issue of the Federal Reserve. In a bid to cushion the American economy from the pandemic, the Fed decided to lower interest rates to a record low. It also implemented quantitative easing (QE), which involved printing trillions of dollars in cash.
Learn more on how to invest in cryptocurrencies.
As a result, these actins pushed bond yields at record low and riskier assets at record highs. Stocks and cryptocurrencies surged. Now, the Fed is doing the opposite. The bank has started hiking interest rates and implementing quantitative tightening (QT). Therefore, investors are abandoning riskier assets like litecoin and bitcoin.
Second, on-chain data shows that activity in litecoin’s ecosystem has declined sharply in the past few months. This means that very few people are holding and using litecoin for transactions.
Finally, the recent happenings in the crypto industry has led to weaker demand for LTC. Some of the most important events are the collapse of Voyager Digital, Celsius, Vauld, and BlockFi. Most investors have exited their crypto investments as they avoid being caught in such a situation.
The daily chart shows that the LTC price has been in a strong bearish trend in the past few months. The coin managed to cross several important support levels like $92.11 and $100 during this sell-off. It remains below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is at the neutral point at 50.
Therefore, litecoin will continue in the downward trend as long as it is below the two moving averages. Until this happens, the LTC will likely retest the support at $40.