Litecoin Could Soon See Another Leg Up After Bounce Off Bottom - Price Analysis

  • Short term: A small uptrend could soon be confirmed.
  • Long term: Looking for the bottom of a downtrend.

With Bitcoin (BTC) about as exciting as drying paint this week, some high-cap altcoins are seeing a bit of movement in the past days with Litecoin (LTC) being one of them.

We start on the 12-hour chart, and we can see that what had looked like a failed breakout from a falling wedge in fact turned into a fakeout-breakout from the wedge. Falling wedges are considered generally bullish, and it often transpires that patterns will break the “wrong” way and then fake back the “right” way as has happened here.

Falling wedge worked out after allLTC chart by TradingView

Two important levels on this chart are the 21 and 55 exponential moving averages (EMAs), the orange and purple lines respectively. Price broke out of the 21 EMA barrier that had been containing it, and has now tested and been rejected at the 55. A retest of the 21 EMA area, if it holds, might signal the chance for another leg up on this pairing.

Coming down to the 4-hour chart with MACD indicator, we can see that LTC is just now testing the inflection line of the pattern - looking like a head-and-shoulders pattern. We don’t see much rollover on the histogram yet, but the MACD is well in positive territory which will make a reversal - if it comes - pretty potent.

Leg #2 in the offing?LTC chart by TradingView

Here we are waiting for an outcome, as if price can hold here at the inflection point at about ₿0.0067, we could well see another leg up and higher into the support band - or maybe even out of it.

How has this translated to the USD pairing? Litecoin price has been picking up, and seems to be forming a small ascending triangle which is a bullish pattern. Again, we see the same 21/55 EMA range, although price looks likely to re-break the 21. There has been no volume pickup on this chart (Coinbase), suggesting that traders perhaps are trading out a stagnant Bitcoin.

Ascending triangle on USD chartLTC chart by TradingView

We see the RSI trending up, and if this trend can hold we could take it as a potential buy signal. The histogram is getting consistently higher highs, and the MACD is close to bouncing bullish on the positive side. All in all, the indicators don’t look great yet, but they could look good pretty soon.

As stated above, with Bitcoin so boring, this is the perfect time for a bit of altcoin action. Bitcoin dominance is at extremely high levels, and the risk-reward for some cautious altcoin trades can’t be anything but good.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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Litecoin's Hashrate Dropped 70% Since Block Rewards Halved to 12.5 LTC per Block

Hashrate on the Litecoin network has dropped nearly 70% from around 523 TH/S to 159 TH/s since the halving event, which cut its block rewards in half.

As CryptoGlobe reported, Litecoin’s halvening saw block rewards drop from 25 LTC to 12.5 LTC per block. Halvings are planned events, which on the Litecoin network occur every 840,000 blocks mined. The reduced LTC payout per block seemingly saw miners stop focusing on Litecoin, and turn to potentially more profitable cryptocurrencies compatible with the ASIC mining machines used on the LTC network.

Litecoin's hashrate over timeSource: BitInfoCharts

Halving events occur as some cryptocurrencies – like Bitcoin and Litecoin – are programmed to slowly reduce the amount of coins entering the market. These halvings ensure scarcity, as both LTC and BTC have a maximum supply of mineable coins. Some analysts believe the price of cryptocurrencies rises after a halving event as investors are reminded of their scarcity and demand goes up, while supply halves.

Bitcoin, which is set to undergo its halving event next year, notably saw its price surge in its previous halvings, which occurred in 2012 and 2016, dropping block rewards to 25 BTC per block and 12.5 BTC per block respectively.

In Litecoin’s case, the recent halving didn’t help its price. CryptoCompare data shows the cryptocurrency is trading at $46.18, after dropping from a $146 high in June of this year. The high came as LTC outperformed the market ahead of the halving.

Litecoin's price performance over last 12mSource: CryptoCompare

The price drop combined with the hashrate drop has seen some analysts argue LTC entered a mining death spiral, with most cryptocurrency miners not being able to profitably mine it. In July, Litecoin creator Charlie Lee predicted the correction, noting block could slow down for “some time” if a large percentage of the miners shut off their machines.

The price and hashrate drop also led to security concerns. ASIC owners likely pointed their machines at other blockchains and could eventually be used to attack LTC.

While 51% attacks are nothing new to the cryptocurrency space, they usually target smaller cryptocurrencies with smaller hashrates and communities. Litecoin is among the top cryptocurrencies and even though its hashrate is down by 70% since the halving, it’s still at its December 2019 levels, when LTC was trading at nearly $400.

Featured image via Pixabay.