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Yesterday's FED minutes did not hold any surprises regarding the expectations of the financial markets, the total cryptocurrency market capitalization just hit new year highs during this week, before climbing back close to the $800 billion mark. However, one of the few altcoins is doing well. This is Litecoin (LTC).
In fact, the latter has just gained over 60% since Wednesday, November 9th. We do not know the real reasons for this spectacular rebound. But the fact that LTC is built on a similar concept to Bitcoin would be no stranger to this movement.
Especially since the failure of FTX could finally distinguish between good and bad projects in the cryptocurrency sector. And maybe Litecoin would potentially be one of the big winners if the current bearrun endswhich is currently gaining ground.
In an extremely hesitant market environment, LTC prices are returning to important chart thresholds against the trend of the entire cryptocurrency market. Won't we see a one man bull run until the end of the year? Or will a hard reality check take care of itself?
Litecoin in weekly units – Prices touching the descending line
After taking a heavy drop in the week leading up to the collapse of FTX, Litecoin has recovered dramatically from one gamma between 49 and 70 dollars. To such an extent that prices are breaking through the 30-week moving average (MM30 weekly). Better yet, I am now touching the descending line of its bear market from the last ATH of May 2021.
However, cryptocurrency investors shouldn't rub their hands too much. Because according to the rules of Weinstein phases, you should not buy the underlying that has a declining weekly MM30. Although it is above the moving average as we are seeing for LTC.
From this observation, we are not immune to a false buy signal. Especially if prices were to amplify the recent upward move beyond the descending line. And it would not be surprising if the latter slowed the impulses of buyers waiting for potential catalysts.
Assuming Litecoin prices finally break through $70 and the descending line, The buyers will gather strength to push them towards the $103 resistance. And probably the weekly MM30 will finally arrest its decline. The other side of the coin, a rejection below $70 would send the LTC where it was a fortnight ago towards the $49 support. Doing so would invalidate the bullish exit of the gamma.
Litecoin in daily units – The exit from the range has been confirmed, but beware of the repercussions
If in the weekly units there is an improvement on the graph, the impact is mechanically positive in the daily units. On one side, Litecoin prices are clearly breaking out of the range from above via an excellent bullish candlestick in yesterday's session. Although this requires confirmation in the next few days. On the other hand, they are taking advantage of the fact that they are above the 200 day moving average (MM200 daily).
And to further rekindle the flame in favor of the buyers, the technical indicators continue to advance above their respective water lines. However, LTC prices breaking above the daily MM200 in a declining phase calls for caution. Because it could be interpreted as a false buy signal. Mainly because we have bearish divergence on the RSI due to higher prices.
Assuming that Litecoin fails to break the downtrend line sustainably, we would fear a reintegration of prices in the gamma. The risk of a fund exit is gaining traction given the systemic damage caused by the FTX failure. In that case, we would wipe out all gains from the last bull run.
LTC – A bounce masking a very sizeable bear market
Considering a lone bull for Litecoin in the current environment would seem pretentious. Not just in a bearrun, it is always the leaders who take over, such as Bitcoin and Ethereum. But let's not forget that Altcoins remain the first to suffer from the shortage of liquidity in the financial markets.
And for good reason, the Fed has shown no signs of easing. In this sense, an increase in rates of 50 basis points instead of 75 still means action in the direction of monetary tightening. And as the bad news continues to mount, cryptocurrencies no longer benefit from the decline in the dollar and in bond rates.
As a result, Litecoin would be at risk of headwinds despite the rally in recent days. With the fear of getting entangled in the dependence on the movements of Bitcoin and Ethereum in times of lean. And about that, the RSI divergence in daily units could testify to a lack of buying relay. This suggests that the recent bullish signals should not be taken at face value.
Thus, the LTC situation since the last ATH of May 2021 could get even worse. In this way, prices would revise the critical support around $26. This would be a decline in line with the standards of the last bear market.
