LIT has plunged over 45% to a new all-time low as sellers fully take control.
Airdrop selling, collapsing buybacks, and sector rotation have fueled the capitulation.
Unless price reclaims $2.25, any bounce is likely corrective with risk toward $1.80.
Lighter (LIT) has slipped into capitulation after plunging more than 45% to a fresh all-time low.
The token has broken below descending-channel support, invalidating the prior consolidation structure.
Currently, sellers maintain control, while buyers step back. LIT’s price now trades in a high-risk zone where volatility can spike.
The selloff also reflects a clear shift in market structure.
At the time of writing, the Lighter token has moved out of controlled distribution and into aggressive selloff territory, which typically indicates that rebounds tend to be corrective.
Weak Demand Fuels the Selloff
On the 2-hour chart, the Money Flow Index (MFI) prints 18.01, indicating a deep oversold territory.
That reading signals persistent capital outflows and a lack of sustained interest from the buy side.
Oversold conditions can trigger short bounces, but in strong downtrends, they appear early and can persist as the price continues to slide.
The Awesome Oscillator confirms that downside momentum is still expanding. As shown below, the AO is currently at -0.165 and continues to display consecutive red bars below the zero line.
This pattern typically indicates trend acceleration, rather than a bottom formation, which maintains the near-term bias as bearish.
Furthermore, analysis of the price action does not offer much relief either. LIT’s price has cut through nearby demand zones and is now trading in a thin historical support zone.
Because of that, any bounce from here is likely to remain a relief rally unless bulls reclaim the broken channel and flip it back into support.
Why Else Is LIT Crashing Today?
The collapse is not a single-event failure but a perfect storm of three other market drivers:
The Lighter Airdrop: Following the December 30, 2025, launch, a significant portion of the 250 million airdropped tokens (approximately 25% of the total supply) is being sold by early users. Despite a brief bounce to $3.16 on January 6, the sell-side pressure has now completely overwhelmed the “buyback” narrative.
Fading Buyback Power: Lighter’s protocol fee-driven buybacks, which allocated 50% of revenue to LIT repurchases, have lost their firepower. On-chain data shows protocol revenue plummeted to just $8,450 on Jan. 13, leaving the treasury unable to defend the critical $2.30 support level.
The Sector Rotation Shift: For some time, capital in the market has aggressively rotated away from Perp DEX tokens toward Privacy Coins like Monero (XMR), DASH, and Horizen (ZEN). Also, with rivals like Hyperliquid and Aster capturing more market share, LIT has seen its daily derivatives volume drop by over 60%
LIT Price Forecast Stays Bearish
After a brief pause around $2.15, the Lighter token resumed its decline, setting new local lows.
On the 4-hour chart, the Directional Movement Index (DMI) supports bearish continuation, with the -DMI remaining above the +DMI, which signals sustained seller control.
The Average Directional Index (ADX) remains elevated, suggesting that the trend is not only bearish but also strong.
Flows also remain pressured. At press time, the Chaikin Money Flow (CMF) continues to reflect outflows and weak participation from buyers.
Until the indicator starts moving back toward the zero line and holds there, the chart continues to favor downside continuation.
Fibonacci levels now define the next danger zone.
At press time, LIT trades near $1.86 and is drifting toward the zero Fib level. If the price breaks below that area, sellers could extend losses further.
Still, a recovery path exists, but it requires a clear reclaim. If LIT’s price can reverse and regain $2.25, that would be the first meaningful sign that momentum is shifting.
In that scenario, the Lighter token price could attempt a bounce into the $2.36 to $2.54 region, although heavy overhead supply in that band would likely challenge any recovery attempt.
What Comes After the All-Time Low?
The technical outlook for LIT is extremely oversold, but a recovery requires more than just a bounce. After the new all-time low, here are the possible scenarios:
The “Dead Cat Bounce” Target ($2.30): The immediate goal for bulls is to reclaim the $2.30 former support (now turned resistance). If LIT can flip this level, it could trigger a relief rally toward the 50-day EMA at $2.23.
The Capitulation Floor ($1.80): If the selling continues, analysts point to the 78.6% Fibonacci retracement at $1.80 as the final line in the sand. A breach of $1.80 would likely enter the token into a very critical state amid the Q1 2026 Mobile App launch.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Victor Olanrewaju is a crypto analyst and reporter at CCN with deep roots in on-chain research and technical analysis. His crypto journey began in 2017, but it was the 2020 Uniswap airdrop that sparked a full-time pivot into the space.
With a foundation in copywriting, Victor honed his craft creating high-converting content for leading crypto brokers — most notably an XRP price prediction that ranked #1 on Google during the 2021 bull run.
He later joined AMBCrypto in 2022, where he combined storytelling with technical and on-chain analysis to cover key market narratives.
In 2024, he expanded his expertise at BeInCrypto, collaborating with analysts and using tools like Glassnode, Santiment, and IntoTheBlock to break down Bitcoin and altcoin trends.
At CCN, Victor covers the top cryptocurrencies, memecoins, macro shifts, blending real-time insights with deep-dive metrics.
He holds a Bachelor’s degree in Physics from the University of Ibadan, equipping him to simplify complex data for a wide audience. Follow his work or connect on LinkedIn or X.
