Digital silver’s golden run has hit a major bump thanks to digital gold. Litecoin, the seventh-largest cryptocurrency in the market with a market capitalization of $3.8 billion saw its price shoot up over the past week, as Bitcoin surged over $10,000 and above. However, with the recent backtrack in the latter’s price, losing 7 percent in an hour, Litecoin’s price has also hit a snag.
For most altcoins now, a drop is inevitable, how they survive it is a matter of not only how closely their price is tied to Bitcoin, but also if they have enough momentum going to prevent a dump. In the short-term, Litecoin saw a massive dump between 0400 to 0500 UTC, falling from $65.09 to $58.96, with the shadow of the 4-hour candlestick slumping as low as $52.44. Given the severity of the drop and the uptick in volume, Litecoin will struggle for the next week or so to recoup the gains, if there’s no trend reversal coming from the Bitcoin market.
In order to understand if Litecoin’s price will drop further or hold, we need to look at its recent price history. Prior to the Bitcoin move, LTC was trading in a strong ascending triangle since the March low. This triangle formed a strong base at the resistance level of $48.88, pushing the price down on four occasions – thrice between 27 April and 9 May and once in early-June. This resistance level was only broken on July 27 when Bitcoin broke $10,000. Despite surging above $50 and as high as $57, LTC saw sideways movement at the end of the month before Bitcoin’s $11,000 move pushed the latter’s price over $60, for the first time since March.
Chaikin Money Flow for the altcoin has been trending downwards with lower highs over the past two weeks, indicating a gradual decrease in net money flow into the LTC markets. While the money flow is positive at 0.11, it has decreased in recent weeks, and given LTC’s lack of existing momentum prior to Bitcoin’s push, the CMF will likely continue to fall.
In isolation, Litecoin will have a tough time, as per the technical charts, if Bitcoin’s bullish swing fails to move its market. Momentum prior to the move is low, a strong resistance lies at $63.53, a descending triangle was exited two weeks ago, into which it can continue to fall back, and the next-immediate support lies at $48.88, a 20 percent price drop from where it currently stands. In terms of volume, LTC’s volume during the price drop [measured in a 24-hours aggregate] was at $3.7 billion in the time of the drop and was $2.8 billion when its price was increasing between 27 to 31 July, indicating a hesitancy from investors.