Litecoin's (LTC) price faces several bearish factors that could lead to a further decline in its value. These include the decreasing likelihood of a spot LTC ETF approval, declining network activity, and a "head and shoulders" pattern suggesting more downside.
Falling Odds of LTC ETF Approval
One of the main reasons for Litecoin's ongoing price drop is the low probability of a spot LTC ETF being approved. According to a survey on the Polymarket platform, the chances of this ETF being approved by July 31 are just 24%, while another survey estimates the likelihood at 42%.
So far, the only company to apply for a spot LTC ETF is Canary Capital. However, the number of applications could increase if the SEC adopts a more crypto-friendly stance. Eric Balchunas, Bloomberg's ETF strategist, suggested that approval of a spot ETF is possible since Litecoin is a Bitcoin fork, which might improve its chances.
Litecoin Network Activity is Declining
On-chain data shows that Litecoin's network activity is decreasing, contributing to negative market sentiment. According to Bit Info Charts, the daily transaction count for Litecoin has dropped to its lowest level since 2023.
Other indicators also point to reduced activity:
Litecoin's hash rate has declined from its all-time high of 1.95 Phash/s to 1.71 Phash/s, indicating lower participation from miners.Average transaction fees on the Litecoin network have also been trending downward, reflecting reduced usage.
Head and Shoulders Pattern Signals Further Decline
Technical analysis reveals a bearish head and shoulders (H&S) pattern for Litecoin. This pattern features a "head" at $117, two "shoulders," and a "neckline" at $96.78. The H&S pattern is one of the most bearish signals in technical analysis.
Litecoin has already fallen below its 50-day moving average and found support at the 100-day EMA. It also dropped below key support at $112.67, which marked its March 2023 peak.
How Low Could Litecoin's Price Go?
If Litecoin breaks below its 100-day moving average, its price could fall to $86.50, the lowest point since December 20. This would represent a 10% drop from its current price. Further support is found at $76.65, which corresponds to its July 26 peak and a 20% decline.
The bearish outlook would only be invalidated if Litecoin's price surpasses the resistance level at $112.67, signaling potential upward momentum.
Conclusion: Litecoin Faces Continued Pressure
Litecoin is under significant bearish pressure due to declining network activity, technical patterns indicating a downtrend, and uncertainty surrounding ETF approval. Without a shift in market sentiment, its price could drop by as much as 20% this week.
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