Today, the price of Litecoin has experienced a decline, similar to the downward movements seen across the broader cryptocurrency market. Specifically, on July 5, the price of Litecoin dropped by more than 3% to $100.50. Additionally, on the same day, the overall capitalization of the crypto market decreased by 2%. This suggests that traders have begun to lock in profits after reaching local highs in various cryptocurrencies.
The relative strength index (RSI) of Litecoin has entered an “overbought” status.
After a significant surge, Litecoin’s price soared by over 65%, hitting a year-to-date peak of $116 on July 2.
This remarkable increase was largely driven by the excitement surrounding Litecoin’s upcoming halving event in August, as well as its listing on EDX Markets—a newly established exchange supported by prominent financial institutions, including Citadel Securities, Fidelity Investments, and Charles Schwab.
However, since then, the price of LTC has undergone a correction, declining by nearly 14%, including a 3% drop on July 5. One of the contributing factors to this correction is the overbought condition observed in Litecoin’s RSI on the daily chart. This situation typically leads to a price drop or a period of consolidation.
Litecoin experienced a decline on July 5, following the downward trend seen in traditional markets. This downward movement coincided with the anticipation of the release of the Federal Reserve’s June policy meeting minutes, which would provide insights into their stance on interest rates. The minutes were scheduled to be released at 6:00 pm UTC on July 5.
Market participants believe that the Federal Reserve officials have discussed the possibility of raising the benchmark interest rate twice more in 2023, despite not implementing a rate hike in the previous meeting. Historically, higher interest rates have negatively affected cryptocurrencies like Litecoin, leading to bearish sentiment.
Litecoin has experienced a technical breakout stage as a result of closing above the upper trendline of the descending triangle pattern. Typically, when a descending triangle reversal breakout occurs, the price has the potential to reach the maximum height of the pattern.
Therefore, based on this breakout, the target for Litecoin’s price in 2023 is projected to be around $240, reflecting a significant increase of 140% from the current price levels.
However, there is another scenario to consider. If Litecoin’s price follows an ascending channel pattern instead, indicating a bearish outlook, the price is expected to test the lower trendline around $85 during the third quarter of the year. This would result in a decrease of approximately 15% from the current price levels.
Furthermore, if the bear flag pattern breaks down, there is a possibility that the price of LTC/USD could decline to even lower levels. In such a scenario, there is a risk of LTC/USD dropping towards the $40 mark in 2023. This potential decrease equates to a 60% decline from the current price levels.
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