Litecoin (LTC) is not likely to begin a new bear trend but there is still a strong likelihood of significant sell off. The above chart for LTC/USD
shows that Litecoin (LTC) has now completed two similar patterns since the beginning of the year. In the first part, Litecoin (LTC) breaks a trend line and falls below it to form a double bottom. After that, it breaks the double bottom and falls again to trade along another trend line. As we can see on the chart, it has now broken that trend line just like it broke the trend line before it. Similarly, it has also formed a double bottom and now risks breaking an important support to fall again.
The reason why the likelihood of a sell off is so high is because Litecoin (LTC) has a very low trading volume and the price can be manipulated easily. In addition to that, Litecoin (LTC) may still have to fall if it is to trend along a similar trend line again. That sell off is unlikely to drag the price below $30 but it might still be a strong wave of a final shakeout. The VIX profile for the above chart indicates that there is not much strength to hold the price down if it tests the support for a third time. There are no signs of a strong bottom formation that we see in the case of most altcoins. This could be due to the fact that Litecoin (LTC) surged astronomically and artificially in 2017, more than the rest of the market just because it was added to Coinbase.
Chart for LTC/BTC
A Coinbase addition no longer seems to be making a long lasting impact on the price of cryptocurrencies. However, for Litecoin (LTC) it made one hell of a difference. The price shot up from $30 to $300 in a matter of weeks. Nothing had changed fundamentally for Litecoin (LTC) but being the cheapest coin on Coinbase pumped it to unbelievable highs. Even now when we are so close to Lightning Network activation on Bitcoin (BTC), Litecoin (LTC) fails to lose its value. There have been debates regarding Litecoin (LTC)’s value proposition but the price seems unaffected by it.
Imagine for a second that Ethereum (ETH) founder Vitalik Buterin sells all of his ETH and buys Bitcoin (BTC), how would you expect the world to react to the price of Ethereum (ETH)? Imagine if it he goes a step further and calls all other coins apart from Bitcoin (BTC) as sh*tcoins. Litecoin (LTC) founder, Charlie Lee has done all of this.
Most people in this space know full well that Bitcoin (BTC) is eventually going to solve its transaction cost and speed issues and when that is done, Litecoin (LTC) will have nothing special to add. However, for some unfathomable reason, the price of Litecoin (LTC) does not seem to be affected by it. We do not know yet if it is whales with a large stack of Litecoin (LTC) just keeping the demand up till they are done dumping or if there actually is a genuine interest in Litecoin (LTC). In any case, Litecoin (LTC) is very vulnerable at the moment and investors should be on the lookout.