• Litecoin (LTC) has rebounded by 130% to almost $100 after bottoming out near $40.50 in June 2022, primarily due to improving risk-on sentiment and the upcoming halving in August 2023.
• Technical analysis suggests that LTC may wipe out most of these gains in the coming months, as it paints a giant bear flag on the weekly chart.
• If the bear flag breakdown occurs, the price is expected to fall by as much as 65%, bringing the downside target to nearly $30.50.
The past few months have been a roller coaster ride for crypto investors, with the prices of most major coins going through huge highs and lows. One of the coins that has seen a particularly large price swing is Litecoin (LTC). After bottoming out near $40.50 in June 2022, LTC has rallied by 130% to almost $100.
The primary reasons for this surge in Litecoin’s price have been the broad improvement in risk-on sentiment, as well as the upcoming halving in August 2023. While this has been a welcome relief for many investors, technical analysts have warned that the current rally may be a “head fake” and that the price of LTC could drop significantly in the near future.
The primary evidence for this warning comes from a giant bear flag that has been forming on the weekly chart for Litecoin since early June 2022. A bear flag is a bearish continuation pattern that occurs when the price consolidates inside an ascending, parallel channel after undergoing a strong downtrend. It resolves after the price breaks below its lower trendline with a rise in trading volumes.
In this case, the previous downtrend saw the price of LTC fall by 70%. Thus, if the bear flag breakdown occurs, the price is expected to fall by as much as 65%, bringing the downside target to nearly $30.50.
There is also the risk that the current rally could be a “head fake” and that the price of Litecoin could drop alongside other riskier assets. This could be due to investors getting overexcited about the upcoming halving and not taking into account the underlying macroeconomic conditions.
Overall, it is hard to predict where the price of LTC will go in the near future. However, it is important for investors to take into account all the signals from the technical and macroeconomic level in order to make an informed decision.