Just as the Litecoin halving is less than a month away, the number four cryptocurrency is starting to show signs of weakness. After posting a 2019 high of $146 on June 22nd, Litecoin has plunged to a low of $84.88 on July 15th. That’s a drop of over 41 percent in less than a month.
If you think the worst is over, think again. A popular Elliottician on Twitter named Benjamin Blunts shared his forecast on Litecoin’s future price action. His prediction comes in the form of a sandwich where two pieces of good news enfold the bad news.
According to the trader, the cryptocurrency’s long-term bottom is in. However, it is very likely to dump again soon before it resumes its uptrend.
The Litecoin halving is 19 days away. For those who don’t know, the halving is one of the most anticipated events in the cryptocurrency community due to its bullish nature. On August 20th, block rewards for miners will be decreased from 25 to 12.5 coins. The cutback of coins in circulation reduces the inflation rate of the crypto token from 8.74 percent per annum to 4.26 percent.
Many people expect that this event will likely supercharge Litecoin’s value. However, trader Benjamin Blunts thinks the exact opposite.
On July 15th, the analyst took to Twitter to share a chart and illustrate how the cryptocurrency has more downside potential. In the first of two tweets, the trader mentioned how Litecoin is “in an interesting place” because one can clearly see a complete five waves up. This is an indication that the market is no longer in a downtrend and that the bottom is in from a macro perspective.
Unfortunately, the decline to $84.88 is “too short” in the eyes of the Elliottician to qualify as a proper wave two. According to the analyst, it is likely just a wave A of a much larger correction which will drive the price down to $70. That’s an over 20 percent dump from current prices.
Interestingly, the timeline of the dump coincides with Litecoin’s halving. Thus, he argues the event will be a sell on news.
It is not all bad news.
In the last part of the second tweet, the trader wrote:
some more time is needed before we start a new impulsive leg to smash all-time highs.
Therefore, Litecoin’s expected drop around the time of the halving may be a good time to buy on dips.
Just looking at the basic structure of a five-wave pattern, you can easily spot the resemblance to the chart posted by Benjamin Blunts. After the drop to $70, which is the second wave, the trader drew a long wave up to illustrate the strong third wave.
The formation of waves three and five gives Benjamin Blunts the confidence to predict that Litecoin would print a new all-time high.
Litecoin is showing signs of bullish exhaustion and an Elliott wave analyst is saying that the downturn is far from over. According to the trader, the incoming halving would be leveraged to dump on unwitting retail traders. Nevertheless, there’s a light at the end of the tunnel as the cryptocurrency would rise from the dead and print a new all-time high.
The expected sharp drop may represent a good opportunity to buy the dip before Litecoin skyrockets.
Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.
Last modified: June 26, 2020 2:26 PM UTC