Litecoin Price is Building For a Big Move: Up Or Down For LTC?

Summary:

The Litecoin price sits between two trend lines, one bullish and one bearish. When the price breaks, there could be fireworks. But in which direction?

The Litecoin price sits between two trend lines, one bullish and one bearish. When the price breaks, there could be fireworks. But in which direction?

Litecoin is lower by $6.68 (-4.13%) at $156.13.

LTC should be highly correlated to Bitcoin. Litecoin was based on the Bitcoin protocol and therefore shares some similarities. However, founder Charlie Lee developed the cryptocurrency to cater to a wider audience.

Its fast block time and cheap transaction fees make Litecoin a perfect vehicle for both micro and point-of-sale payments.

According to CoinMarketCap.com, Lee aimed to develop a “lite version of Bitcoin,” hence the name.

In general, altcoins often follow Bitcoin’s overall direction. However, the lower value assets have less institutional participation. This leads to lower liquidity, which in turn increases volatility. Therefore, they often outperform BTC on the way up and conversely underperform on the way down.

The Litecoin price is currently experiencing the latter and has lost 63% from its 2020 high of $417.63, vs. Bitcoin’s 45% fall from grace.

Losing The Race Against BTC

LTC Technical Outlook

Clearly, LTC’s fortunes are tied to the market leader and broader crypto market sentiment. However, the 4-hour chart gives us an indication of what may follow for the Litecoin price.

We can see that LTC is wedged between two trend lines. The more important of the two sits below the market, at $145. The trend from October 2020 is a strong support line, and the price is yet to close below this threshold.

Above the market, a descending trend from the 20th of May is at $173.80. This links a series of higher lows following the May 9th crypto crash.

In summary, the short-term downtrend threatens Litecoin’s longer-term uptrend.

A break of support (on a closing basis) puts LTC in danger of re-testing the November highs at $92.00. Alternatively, if the price can clear $174, it should target the start of the descending trend at $230.

Traders should look to Bitcoin for cues and be prepared to act on either of the above scenarios. Of course, false breakouts happen. And for that reason, buyers should place a sell stop below the breakout at $173.80. Sellers, therefore, should place a buy stop above the trend at $145.