Litecoin LTC faces tough battle: strong resistance may hinder recovery

On-chain data indicates that Litecoin may face significant resistance, making the recovery of LTC price even more challenging. As pointed out by Trader Kamikaze using market intelligence platform, a large number of LTC investors are buying at the upcoming level.

Figure 1 shows the distribution of LTC addresses based on the prices of the currency purchased on the network last time. Here, the size of the dot is related to the amount of cryptocurrency obtained within the corresponding price range. As shown in the figure, there is a large dot in the range of $81.64 to $83.88, which means that a large number of tokens were purchased during the asset trading period.

More specifically, about 667 million LTC were purchased by 432,070 addresses within this range. Based on the current exchange rate, this amount is worth over 534 million US dollars.

So, what does this mean for Litecoin? In on-chain analysis, the strength of any level as support or resistance depends on how many tokens have been accumulated at that level. Therefore, investors' LTC ranges widely and may impact cryptocurrencies upon retesting.

The reason behind this theory is that the cost basis is an important level for any holder, so they may be more likely to react when the cost basis is retested. The more investors who share the cost basis in a narrow range, the stronger the reaction will be.

The reaction to a retest depends on whether it occurs from above or below. Investors who incurred losses before the retest (i.e., occurring from below) may be inclined to sell as they may fear that the price will quickly drop again. Exiting at breakeven at least means they can avoid any losses.

On the other hand, investors holding green coins before retesting may decide to take further risks and believe that the price will pump again.

Therefore, levels below the current price can serve as support, while levels above the current price can serve as resistance. Due to the significant supply barrier for Litecoin at levels above the current price, a retest may trigger selling pressure. It remains to be seen whether a cryptocurrency pump and retest will hinder the recovery of LTC within this larger range.

Litecoin is currently below its supply peak, with a price of around $80.


(Data source: Keshav Verma)