After the Federal Reserve FOMC meeting, the cryptocurrency market crashed, and the price of Litecoin (LTC) fell accordingly. This decline was due to the Fed's tough decision to reduce the expected number of interest rate cuts in 2025 from four to two. Grayscale Investments seems to have capitalized on this drop by purchasing LTC. Will this institution-led buying frenzy, combined with hopes for a spot LTC ETF, trigger a rebound for Litecoin?
Grayscale buys LTC on dips, will the price of Litecoin rebound?
After a market-wide crash, the current price of Litecoin is $109, down 25% from this year's highs. This decline is primarily related to the ongoing weakness in the cryptocurrency market, with Bitcoin's price dropping below $100,000 for the first time in two weeks.
Despite Litecoin's sharp decline in the short term, Grayscale Investments continues to buy. Data compiled by CoinGlass shows that the company purchased 2,230 Litecoins on Thursday, with a total accumulated holding of over 41,100 Litecoins in the last 30 days. The total value of its Litecoin holdings currently exceeds $220 million.
Is a spot Litecoin ETF about to be launched?
Grayscale's purchases increase the likelihood of the company applying for a spot Litecoin ETF in 2025. Just this week, Bloomberg ETF research head Eric Balchunas pointed out that since the LTC ETF is similar to Bitcoin, it will have an easy path to approval. If true, this event could catalyze a significant rise in the price of Litecoin.
Litecoin is a hard fork of Bitcoin and shares some similarities with Bitcoin, such as halving and a fixed supply cap. The U.S. Securities and Exchange Commission also does not consider Litecoin a security, which will simplify its ETF approval.
Grayscale accumulating LTC is a good sign, as it is one of the largest creators of cryptocurrency exchange-traded funds.
LTC hash rate hits all-time high
Meanwhile, Litecoin's hash rate has surged to an all-time high, indicating an increase in mining activity. Its hash rate climbed to 1.66 TH/s, above the 30-day average of 1.52k. The hash rate is an important figure in cryptocurrency, measuring the computational power generated per second. The higher the number, the healthier the network, which has a greater impact on LTC prices.
Litecoin's mining difficulty also saw a significant increase in the months following the last halving event. Additionally, the number of Litecoin balance addresses has remained relatively stable over the past few weeks, staying above 8 million.
LTC Technical Analysis: Will Litecoin rebound from the key support level?
From a technical perspective, LTC's value may rebound soon. It fell to a low of $103, which is a notable level since December 9. The token also remains above the 50-day moving average, providing substantial support.
This price is also nearly 25% lower than the previous year-to-date high, which is the upper side of the cup and handle (C&H) chart pattern. C&H is a popular bullish continuation setup, so as traders adapt to the Fed's hawkish new normal, LTC is likely to rebound. If bullish momentum remains strong, a breakout above $112.40 will confirm the bullish view and could push it up to around $150, eventually reaching $200.
Conversely, falling below the key psychological support level of $100 would invalidate the bullish view and indicate that the price of Litecoin will decline further. Such a development could bring LTC back to the key support level of $90.
