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Litecoin price hits $400 all-time high, but LTC rally at risk of overheating


10 May 2021

#Litecoin

Litecoin price achieves $400 amid an overall crypto market boom. Litecoin (LTC) has broken the $400 mark, reaching a new all-time high price of $414 on Bitstamp on Monday. The problem with buying Litecoin is that it has become too expensive in a very little period. The world’s 10th-largest cryptocurrency by market capitalization is worth 215% more than it was at the beginning of this year, soaring from $124.42 to a new record high of $413.90.

Its massive rally has beaten traditional markets on a year-to-date timeframe, with many independent analysts now predicting the move to extend toward $500.

Rotational trading

Eye-popping returns in the Litecoin market came on the heels of a broad upside move in the cryptocurrency market. The silver crypto’s top altcoin rivals, including Ether (ETH), XRP, Cardano (ADA) and many others, posted better profits, with Dogecoin (DOGE), a joke cryptocurrency, rising by more than 17,000% YTD at one point. Jason Lau, chief operating officer of OKCoin — a San Francisco-based crypto service business — highlighted a brewing inverse correlation between Litecoin and Dogecoin, noting that the DOGE/USD exchange rates dropped by 12% in the period that saw the LTC/USD exchange rates popping higher by 12%.

Meanwhile, the Litecoin Dominance Index, a metric that measures Litecoin’s strength against the rest of the cryptocurrency market, increased from 0.96% on Sunday to as high as 1.11% on Monday. That further reflects a sentimental shift to the Litecoin markets as other alternative cryptocurrency rallies show signs of cooling off.

But Litecoin is now grappling with the same overvaluation risks that caused Dogecoin’s price to crash by as much as 33% in the previous sessions. At the core of this bearish analogy lies a classic momentum oscillator indicator, dubbed as the Relative Strength Index (RSI), that has historically predicted potential price reversals in global markets. It now tells the same story about Litecoin.

Litecoin overbought?

The LTC/USD daily chart shows its RSI at an inflection level near 79.02. That is 9 points above the overbought threshold, which has earlier led to price corrections. Litecoin price’s response to higher RSI levels in recent history. Typically, a short-term trend reversal in the Litecoin market — when its RSI tops out — leads the price to test the 20-day exponential moving average (the green wave) as interim support. Meanwhile, an extended sell-off prompts traders to treat the 50-day simple moving average (the blue wave) acting as the primary downside target.

Therefore, a potential pullback following the recent explosive move risks sending LTC/USD to $252–$310 based on current moving average valuations.

Macroeconomic catalysts

Away from technicals, the macroeconomic catalysts continue to support cryptocurrency markets on the whole. A study conducted by Charles Schwab showed that more than 51% of Millennials and Generation Z investors would more likely invest in cryptocurrencies than traditional stocks. Their interests in the emerging digital assets sector have surged in the wake of inflation and dollar devaluation fears, especially as the central banks around the world respond to the coronavirus pandemic with easing monetary policies.

The United States Federal Reserve, for instance, has clarified that it would continue its $120-billion monthly asset purchase program while maintaining benchmark rates near zero at least until 2023. That has reduced the opportunity costs of holding traditional safe havens like bonds and dollars among regional investors.

Meanwhile, the correlation between Bitcoin (BTC) and Litecoin stands near 0.40, according to data collected from Crypto Watch.


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Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 77.6% 42 $57 397.14 5.51% -0.13% $1 084 001 374 692 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 78.8% 32 $4 325.04 6.69% 3.38% $512 656 495 446 ETH 7 days price change
3 Binance Coin (BNB) BNB Binance Coin predictions 73.6% 53 $609.29 4.33% 7.07% $101 630 227 689 BNB 7 days price change
4 Tether (USDT) USDT Tether predictions 96% 1 $1.000997 0.02% -0.01% $73 194 134 956 USDT 7 days price change
5 Solana (SOL) SOL Solana predictions 69.2% 65 $203.84 7.44% -8.23% $61 976 513 439 SOL 7 days price change
6 Cardano (ADA) ADA Cardano predictions 68.8% 60 $1.59 5.99% -11.72% $52 852 892 795 ADA 7 days price change
7 XRP (XRP) XRP XRP predictions 74.8% 51 $0.987767 7.45% -5.41% $46 582 102 093 XRP 7 days price change
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15 Wrapped Bitcoin (WBTC) WBTC Wrapped Bitcoin predictions 78% 46 $56 525.74 5.34% -1.06% $14 327 926 572 WBTC 7 days price change

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