On-chain metrics signal an imminent correction in the price of Litecoin (LTC)
Date: 2023-06-28 Author: Karina Ziganova Categories: BLOCKCHAIN
Let's figure out whether the bears will be able to seize the initiative and provoke LTC to fall below $80 in the coming weeks.
The price of Litecoin is up 25% since falling to a three-month low of $72 on June 14. However, as we approached $90, some on-chain indicators began to give red signals, hinting at the possibility of a correction.
Activity in the Litecoin network sank by 80%
On-chain metrics show that the main driver of the current LTC rally was far from transactional user activity. In the period from May 25 to June 26, the number of transactions on the Litecoin network sank by 80% - from 532,000 to 106,000
More importantly, between June 20 and June 27, the price of the token increased by 14%, while the number of transactions decreased by 46%. The drop in activity against the backdrop of an uptrend means that the growth was primarily due to intense speculation. If transactional activity does not pick up in line with the positive price trend, the LTC rally could soon come to a standstill.
The readings of the NVT indicator confirm the bearish outlook
The readings of the NVT (Network Value to Transaction) on-chain indicator of the Santiment platform confirm the possibility of an imminent correction. This metric is comparable to the traditional market market price-earnings ratio, where price is market capitalization and profit is the value of the network. It determines the under-/overvaluation of an asset at current price levels.
Between June 20 and June 27, the NVT soared by 240%, from 3.75 to 12.83. This reinforces the theory that the current growth has not been organic. Along with the fall in transactional activity, the uptrend of the NVT is a critical indicator that urges bulls to be cautious.
The price of Litecoin may fall below $80 again
Given the above-mentioned factors, LTC is likely to face another correction to $80 and below. However, on the way to this mark, the asset may be supported by 437,140 addresses that bought 1.6 million coins at an average price of $84.78.
In the event of a sharp increase in transactional activity, the bulls will remain in control of the situation and push Litecoin to $100. Profit-taking 1 million wallets that purchased 14.23 tokens at a maximum price of $91.24 could slow down the rally — but if they don't hold up, LTC will rush to $102 for the first time since April this year.
