- LTC formed a bearish flag at press time, indicating further nosedive despite the recent plunge.
- Long-term holders were liquidating their positions.
Litecoin [LTC] was one of the top cryptocurrencies hit hard by the market crash on the 3rd of December. This was because it lost 11.17% of its value, according to data from CoinMarketCap.
Though market prices have started to recover, it might not be the same for LTC.
Analyst Ali Martinez put out this prediction. According to Martinez, LTC was facing intense selling pressure. This sell-off was one of the reasons the price nosedived from $72 to $65 at press time.
However, that might not be the end of a torrid season for Litecoin, Martinez opined.
In his post on X (formerly Twitter), the analyst shared a 3-day chart that showed LTC forming a bear flag. As a result of the formation, Martinez noted that the coin might sink to $38.
Post-recent dip, the outlook for #Litecoin appears challenging. If the selling pressure continues, $LTC might see a push down to $38, potentially confirming a bear flag formation. pic.twitter.com/Y21U6eR5tw
— Ali (@ali_charts) January 3, 2024
Can’t find any trace of bulls in the picture
Sinking to $38 would mean that LTC would lose 1.71x its press time value. However, the prediction would only come to pass if sellers continue to push the price action further.
If this happens, Litecoin’s candlestick pattern might extend downward while confirming the bearish flag formation.
The projection was also validated by the Hodler Net Position Change. The metric shows the monthly position change of long-term investors. When Litecoin HODLers accumulate a new position, the net change is positive.
According to AMBCrypto’s analysis of the metric, the net change flipped negative on the 28th of December 2023. It has remained the same since then. This drop indicated that Litecoin HODLers were cashing out instead of accumulating.
Source: Glassnode
Besides on-chain data, AMBCrypto went ahead to evaluate LTC’s technical state. At press time, the sharp fall indicated by the red candlestick confirmed the severe selling pressure.
LTC remains the fall guy
A look at the MACD also indicated that momentum was bearish. Signals from the MACD validated the thesis because the 12-day EMA (blue) had crossed below the 26-day EMA (orange).
This position suggested that LTC would keep oscillating downwards. Furthermore, the 50 EMA (yellow) had formed a death cross over the 20 EMA (cyan). This buttresses the point that LTC was headed downwards.
But what are the next targets for Litecoin? According to the 0.236 Fibonacci retracement, LTC might drop to $63.72 within a short time.
Source: TradingView
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However it seems that traders are not yet giving up on Litecoin. AMBCrypto drew this inference from the Funding Rate, which was 0.01% at press time.
This positive reading suggests that there are more traders with bullish convictions, than those on the bearish side.