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Litecoin (LTC) is once again at risk of massive sell off. During a market meltdown, coins that have little to no use case of their own are at much higher risk because not only do they risk a loss in value but they risk abandonment. During the 2018 crash, we saw the core Etheruem Classic (ETC) development team that had been working on the cryptocurrency from the very beginning finally abandoned the project citing financial difficulties. The daily chart for LTCUSD/BTCUSD shows that the ratio has once again declined below a key support. In fact, this time it risks a decline to much lower levels because we have yet to see Bitcoin (BTC) decline to the 200 Week EMA. If that happens, this ratio will decline to levels not seen since the creation of Litecoin (LTC).

This is by no means an ordinary development as it points to the strong probability of cryptocurrencies like Litecoin (LTC) experiencing unprecedented pain during the next downtrend. If Bitcoin (BTC) were to go down to $1,200 or lower, cryptocurrencies like Litecoin (LTC) would lose almost all of their value. Besides, when the market declines that low, it will stay that low for a long time because the hurt market confidence will take a lot longer to restore. This means that there is a high probability that the development teams working on cryptocurrencies like Litecoin (LTC) might find it very hard to operate. This is a serious threat to blockchain projects that don’t have a use case of their own. Litecoin (LTC)’s only use case is to be a faster and cheaper alternative to Bitcoin (BTC) for now. Bitcoin (BTC) could change that with upcoming upgrades but even if it doesn’t there are hundreds of coins that can do the same so what justifies Litecoin (LTC)’s valuation?

The daily chart for LTC/USD shows the price trading close to the 61.8% fib extension level. A break below this level would pull the price down to $30 and eventually much lower. If BTC/USD declines below $3,000 we can expect Litecoin (LTC) to decline below $20 potentially to a single digit price. As tempting as it may seem to “buy the dip” here, it is important to realize that the correction is not over yet even for short term. 

Since the creation of Litecoin (LTC), many investors have been very comfortable buying just any cryptocurrencies without any regard for their merits or demerits. One of the main reasons LTC/USD was able to grow so much in such a short time was because of its low price compared to Bitcoin (BTC). It was cheaper and faster than Bitcoin (BTC) and many investors thought it could beat Bitcoin (BTC) to become the largest cryptocurrency by market cap or at least rise in value close to that of Bitcoin (BTC). However, times have changed now and after the pain the market inflicts during the next downtrend, investors will be a lot more careful buying coins based on their own merits and demerits.

Jefe Caan , 2019-11-27 00:00:00 ,

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

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