{"id":56339,"date":"2023-07-22T01:07:32","date_gmt":"2023-07-22T01:07:32","guid":{"rendered":"https:\/\/egrowonline.com\/?p=56339"},"modified":"2023-07-22T01:07:32","modified_gmt":"2023-07-22T01:07:32","slug":"litecoin-price-at-risk-of-a-30-drop-if-key-ltc-futures-historical-trend-repeats","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=56339","title":{"rendered":"Litecoin price at risk of a 30% drop if key LTC futures historical trend repeats"},"content":{"rendered":"


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With less than two weeks until Litecoin\u2019s halving<\/a>, when the miner\u2019s block subsidy will be cut in half, traders are questioning whether the additional scarcity effect will be enough to sustain the LTC price above $90.\u00a0<\/p>\n

Litecoin\u2019s (LTC<\/a>) price has declined by 19% in the last 18 days, but it has shown a positive 31% performance this year. Notably, most gains occurred between June 29 and July 2, with a 34% rally pushing the price to a 14-month high of $115.<\/p>\n

Litecoin\/USD 1-day price at Coinbase, 2023. Source: TradingView<\/em><\/figcaption><\/figure>\n

However, there\u2019s an alarming statistic coming from the derivatives market that indicates a sharp correction is likely underway.<\/p>\n

Historical data doesn\u2019t favor Litecoin bulls <\/h2>\n

Each of the previous three instances where Litecoin futures open interest dropped below $500 million caused price drops of 38% or higher, which potentially matches the current scenario.<\/p>\n

Litecoin futures\u2019 aggregate open interest in dollars from June 29 ($300 million) to July 2 ($615 million) shows there was a significant surge, indicating increased demand for leveraged futures contracts.<\/p>\n

On July 2, Litecoin\u2019s price reached a 14-month high but subsequently declined 20% to $92. However, the concerning aspect is Litecoin\u2019s open interest remaining above the $500 million mark. This suggests buyers added margin to avoid liquidation, yet the risk of a sharp correction persists.<\/p>\n

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Litecoin futures aggregate open interest in USD over the past year. Source: CoinGlass<\/em><\/figcaption><\/figure>\n

Higher active contracts (open interest) are generally positive, enabling investors who require a specific market size to participate. Even if it\u2019s not necessarily bullish for price momentum, it allows for larger price swings due to leverage and potential liquidations when a trader\u2019s position is closed due to a lack of margin.<\/p>\n

A look back at the November 2021 crash and open interest<\/h2>\n

Litecoin\u2019s open interest dropping below the $500 million threshold seems a reliable indicator of investors\u2019 diminished interest, and the three latest occurrences confirm the thesis, as its price faced drastic corrections in each instance.<\/p>\n

Litecoin futures aggregate open interest in USD, late 2021. Source: CoinGlass<\/em><\/figcaption><\/figure>\n

On Nov. 10, 2021, Litecoin\u2019s open interest surpassed $500 million, coinciding with a six-month price high of $289. Interestingly, Litecoin\u2019s price crashed 48% in the 24 days after open interest dropped below $500 million on Nov. 14, 2021.<\/p>\n

Litecoin\/USD 1-day price at Coinbase, late 2021. Source: TradingView<\/em><\/figcaption><\/figure>\n

Previously, Litecoin\u2019s open interest had surged but failed to break the $500 million mark, and even a 40% price gain to $232 in early September couldn\u2019t break that barrier. <\/p>\n

Further confirming the relevance of open interest, two other instances occurred in 2021 between February and June, marking significant drawdowns after breaking the futures open interest $500 million threshold.<\/p>\n

Similar events in February 2021 and May 2021<\/h3>\n
Litecoin\/USD 1-day price at Coinbase, early 2021. Source: TradingView<\/em><\/figcaption><\/figure>\n
Litecoin futures aggregate open interest in USD, early 2021. Source: CoinGlass<\/em><\/figcaption><\/figure>\n

On Feb. 8, 2021, Litecoin\u2019s open interest surged above $500 million, marking a 64% price gain, which peaked at $247 on Feb. 20, 2021. However, on the same day, open interest dropped below $500 million, leading to a 38% price decline in the next eight days. Notably, the $200 psychological price support held for five days before the Litecoin price declined to $142.<\/p>\n

Again, on May 9, 2021, Litecoin\u2019s open interest fell below $500 million after 49 days. It reached an all-time high of $409 during that period, followed by a 71% correction in just 13 days, settling at $118.<\/p>\n

Though causation cannot be drawn from events of over 19 months ago, it\u2019s essential to keep an eye on Litecoin\u2019s open interest. If it declines from the current $500 million level, history suggests a potential 30% drawdown from $94 to $62. <\/p>\n

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.\n<\/p>\n<\/div>\n


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With less than two weeks until Litecoin\u2019s halving, when the miner\u2019s block subsidy will be cut in half, traders are questioning whether the additional scarcity effect will be enough to sustain the LTC price above $90.\u00a0 Litecoin\u2019s (LTC) price has declined by 19% in the last 18 days, but it has shown a positive 31% […]<\/p>\n","protected":false},"author":1,"featured_media":56340,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[43],"tags":[1371,2646,7122,103,199,262,195,4531,1500,654],"class_list":["post-56339","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-litecoin","tag-drop","tag-futures","tag-historical","tag-key","tag-litecoin","tag-ltc","tag-price","tag-repeats","tag-risk","tag-trend"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2023\/07\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjMtMDcvMjUxM2FlNjYtZDE0ZS00YjFmLWIxMjgtMzhkNjZiZWM4MWZkLmpwZw.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/56339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56339"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/56339\/revisions"}],"predecessor-version":[{"id":56341,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/56339\/revisions\/56341"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/56340"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56339"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56339"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}