Litecoin (LTC) has broken the $400 mark reaching a new all-time high price of $414 on Bitstamp on May 10. 

The problem with buying Litecoin is that it has become too expensive in a very little period. The world’s tenth-largest cryptocurrency by market capitalization is worth 215 percent 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 (YTD) timeframe, with many independent analysts now predicting the move to extend towards $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, XRP, Cardano, and many others, posted better profits, with Dogecoin, a joke cryptocurrency, rising by more than 17,000 percent YTD at one point in time.

Jason Lau, chief operating officer at 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.

Chart

Litecoin Dominance Index recovers amid rotational trading. Source: LTC.D on Tradingview.com

But Litecoin now grapples with the same overvaluation risks that caused the Dogecoin 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. 

Chart

Litecoin price's response to higher RSI levels in recent history. Source: LTCUSD on Tradingview.com

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 percent of millennials and Gen 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 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.

Cryptos feed

Latest Crypto News


Latest Crypto News & Analysis

Editors’ Picks

SafeMoon Price Prediction: SAFEMOON has one last chance for 65% rally

SafeMoon price experienced a massive sell-off that has pushed it to slice through major support levels, jeopardizing its ability to move higher. Despite this, SAFEMOON currently sits above the last line of defense.

More SafeMoon news

Ripple to keep headquarters in US despite lack of clarity around SEC crypto regulations

While the SEC v. Ripple continues to see no end in sight, the blockchain firm is increasingly moving out of the United States. However, Ripple CEO Brad Garlinghouse stated that the firm is not giving up on the US. SEC Chair Gary Gensler believes that ...

More Ripple news

75% of Ethereum nodes prepared for London hard fork as ETH price surges above $2,700

Roughly 75% of Ethereum nodes are ready for the upcoming upgrade, the London hard fork. The ETH London upgrade is expected to take place on block 12,965,000, scheduled to occur on August 5. Ethereum price managed to slice above $2,700 for the first time since early June. 

More Ethereum news

MATIC Price Prediction: Polygon awaits a trigger that could propel it 68%

MATIC price has stayed lull after July 26 swing high at $1.137. The sideways movement indicates a build-up of pressure, which could lead to a massive move in either direction. A breakdown of the $0.90 demand barrier will invalidate the bullish thesis.

More Polygon news

BEST CRYPTO BROKERS/EXCHANGES



Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast

BTC

ETH

XRP