Among large-cap cryptoassets, only binance coin has performed better, and litecoin’s year-to-date rally leaves the bitcoin price’s 40 percent advance in the dust. However, one team of crypto analysts says the sixth-largest cryptocurrency looks poised for a sell-off.
Litecoin Price Likely to Crash Through Support – And That’s OK!
Writing in a note to clients on Wednesday, crypto brokerage BitOoda said that a downward wedge has begun to form on the litecoin chart, suggesting that the cryptocurrency could be on the verge of a short-term breakdown. That sell-off would likely cause the litecoin price – which currently holds near $80 – to crash below its near-term support line at $75.
BitOoda EVP Brian Donovan wrote:
“[W]e have seen a downward wedge forming over the last week or so. We look for potential breakdown of that $75 near-term support.”
But while Donovan’s analysis suggests that traders might be wise to take some short-term profits, a breakdown would not necessarily be a sign of long-term weakness in the cryptocurrency. Rather, it would be a “healthy” retracement given that the litecoin price has already surged more than 350 percent from its bear market low at $22.
“LTC has rallied from the lows of last December from ~$22 roughly 350%. A short-term retracement would not at all be unlikely NOR would it be a bad sign for the token. Healthy pullbacks can and should occur in an asset that rallies this hard, this fast.”
LTC Bull: Triple-Digit Mark Not Out of the Question
Even so, not everyone is convinced that litecoin’s support level test will result in a breakdown.
Writing on Twitter, The Rhythm Trader set forth a more bullish scenario, arguing that if more volume rushes in to defend that support level – which until recently was a key resistance line – the litecoin price could quickly vault into triple-digit territory.
“If $LTC shows a little volume here, this could get really interesting with a break of $100 quick if this support holds.”