97 Interactions, 2 Today
Most cryptocurrencies have rebounded nicely in recent weeks as a result of Bitcoin’s breakthrough above $50,000. Litecoin, the 16th most valuable cryptocurrency by market cap, also rose in value, gaining 38% in August alone.
While there has been a strong historical association between the price trajectory of Litecoin and the movement of the king coin, this Litecoin rally appears to have a different potential.
Exciting price action
On the daily chart, Litecoin encountered significant resistance at $190. In fact, it has been hovering just below that mark since mid-August. However, seven consecutive green candles lined up in the 4-hour timeframe in the last few days is noteworthy. This was last seen in late May, after Litecoin recovered from a near four-month low.
Furthermore, Litecoin has been posting higher lows, indicating a protracted rise and a persistent northern trend. On the one-day chart, LTC appeared to be building an ascending triangle pattern – a bullish structure that predicted an upside breakout.
Block-space demand and more participants
With the altcoin just under $200, trading at $186 at press time, many are expecting LTC’s price to break out. Amid this, a sheer rise in Litecoin’s new addresses can come as a sigh of relief for the network and its participants.
In fact, new addresses on LTC have risen by more than 60% since August-end.
Another encouraging sign was that the transaction count for Litecoin reached an all-time high. Transaction count is a proxy for increasing block space consumption, and it indicates that the network is growing and in demand. This could be attributed to the long-awaited MimbleWimble Extension Blocks (MWEB) upgrade.
The update is set to be up by the end of this year, according to developer David Burkett. The update’s August progress entailed rebased wallet changes on top of v0.21, cleaner key/address generation & mgmt, and starting the release process for 0.21 with Taproot.
Supply barrier ahead
Analyst Ali Martinez pointed out that while traders establish long positions in expectation of a breakout over $200 for LTC, they should be cautious of the supply hurdle ahead.
Notably, the In/Out of Money Around the Price (IOMP) statistic revealed on 1 September that more than 120k addresses had previously acquired almost 4.70M LTC between $183.35 and $188.58. IOMAP, on the other hand, observed that Litecoin had overcome all significant resistance barriers in just one day.
Martinez also stated that because there are no big supply barriers ahead, it is only a matter of time before LTC rises to $200 or more.
Finally, while the asset was trading above the 50-day moving average at the time of publication, it was still trading below the 200-day moving average. This suggests that LTC may still need to consolidate before making a move.