Litecoin (LTC) has increased investors’ bullish expectations with its recent rise. However, significant resistance levels and mixed on-chain metrics could hinder this rise. The increase in the cryptocurrency’s value indicates a potential change in market dynamics and could push LTC towards a significant rise with increasing trader interest.
According to COINOTAG analysts, “This breakout is remarkable, but it is useful to be careful when resistance levels come into play.”
Although Litecoin is targeting $400, resistance levels and on-chain metrics could pose obstacles to continued growth.
Litecoin: Resistance Levels and Upside Potential
The recent breakout has turned Litecoin’s price action higher, with the $136 and $232 levels seen as critical resistance levels. Traders are watching these levels closely as indicators of future momentum. A continued rise suggests not only the possibility of a new trend, but also increased buying interest that could push prices higher on a sustained basis. Breaking through these resistances could be a significant step for Litecoin on its path to the $400 target.
Moreover, the breakout from the symmetrical triangle reinforces that the price action will be bullish and increases investor confidence with strong market participation. The Relative Strength Index (RSI) is currently at 61, indicating that the rally continues without entering the overbought territory. The uptrend in the 9-day and 21-day moving averages suggests that Litecoin has a sustainable rise.
As the price approaches critical resistance levels, traders may need to be wary of weakening momentum or a possible excessive upside beyond these levels.
On-Chain Metrics and Mixed View
Litecoin’s rise is mixed in on-chain metrics. The “in the money” metric is showing positive growth of 1.15%, suggesting that some holders are making profits and could boost investor confidence. However, there is a difference in growth rates; while the density metric is up 0.13% due to interest from large holders, net network growth remains at just 0.37%, raising some concerns about long-term sustainability.
Additionally, a 3.22% decrease in significant transactions suggests that institutional investors are acting cautiously, so continued strong network activity is critical for the price to sustain its upward momentum.
Litecoin’s Valuation and Possible Instability
The current MVRV ratio for Litecoin stands at 25.41%, indicating that the cryptocurrency has a moderate valuation relative to its market price. If the upward trend continues, there is room for potential gains. However, the difference between the price and the daily active addresses (DAA) stands out at 71.57%. This could be a potential indicator of instability if the network activity does not match the price increase. In other words, the recent growth may not yet be on solid ground.
Investors should be wary of sudden fluctuations and monitor network activity closely.
