On the strength of Bitcoin’s breakthrough beyond $50,000, most cryptocurrencies have rebounded nicely in recent weeks. Litecoin, the 16th most valuable cryptocurrency by market capitalization. It has also risen in the rankings, with gains of 38% in August alone.
While there has historically been a strong link between Litecoin’s price trajectory and the movement of the king coin, this Litecoin rally appears to have a distinct potential.
Exciting price action
Litecoin hit a big resistance level at $190 on the daily chart. Since mid-August, it’s been hovering slightly below that mark. However, the previous couple of days has seen seven consecutive green candles line up on the 4-hour period. That was last seen in late May when Litecoin had recovered from a near four-month low.
Furthermore, Litecoin has been making higher lows. It is a solid indicator of a long-term uptrend and a northward trajectory. On the one-day chart, LTC appeared to be creating an ascending triangle pattern. It is a bullish shape that pointed to an upside breakout.
Block-space demand and more participants
Many anticipate the price of LTC to break out now that it is barely under $200, trading at $186 as of press time. In the midst of this, the network and its members may breathe a sigh of relief as the number of new addresses for Litecoin increases dramatically.
Indeed, since the end of August, the number of new addresses on LTC has increased by more than 60%.
Litecoin’s transaction count also reached an all-time high, which is a positive indicator. The increase in transaction count is a proxy for increased block space demand. This indicates that the network is expanding and becoming more popular. The much-anticipated MimbleWimble Extension Blocks (MWEB) update may potentially be to blame.
According to developer David Burkett, the upgrade will be ready before the end of the year. Rebased wallet updates on top of v0.21, simpler key/address creation and management, and beginning the 0.21 release process with Taproot were all part of the update’s August work.
Supply barrier ahead
In the midst of high expectations for a breakout over $200 for LTC, expert Ali Martinez cautioned traders to be wary of the supply hurdle ahead when they open long positions.
On September 1, the In/Out of Money Around the Price (IOMP) statistic revealed that roughly 4.70 million LTC had been acquired between $183.35 and $188.58 by over 120k addresses. IOMAP, on the other hand, found that Litecoin has overcome all key resistance barriers in just one day.
Martinez also stated that because there are no substantial supply barriers ahead, it is only a matter of time until LTC reaches $200 or more.
Finally, while the asset was above the 50-day moving average at the time of publication, it was still below the 200-day moving average in terms of price. This implies that before making a move, LTC may have to go through some consolidation.
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