After the Federal Reserve FOMC meeting, the cryptocurrency market crashed, and the price of Litecoin (LTC) also fell. This decline was due to the Fed's tough decision to reduce the expected number of rate cuts in 2025 from four times to two. Grayscale Investments seems to be taking advantage of this drop by purchasing LTC. Will this institutional-led buying frenzy, coupled with hopes for a spot LTC ETF, trigger a rebound for Litecoin?
Grayscale's purchase of LTC at a low price, will the price of Litecoin rebound?
After a widespread market crash, the current price of Litecoin is $109, down 25% from this year's peak. This decline is mainly related to the continued weakness in the cryptocurrency market, with Bitcoin's price falling below $100,000 for the first time in two weeks.
Despite the short-term plunge in Litecoin, Grayscale Investments continues to buy in. Data compiled by CoinGlass shows that the company bought 2,230 Litecoins on Thursday, with a 30-day cumulative holding of over 41,100. The total value of the Litecoins they hold is currently over $220 million.
Is a spot Litecoin ETF about to be launched?
Grayscale's purchases have increased the company's chances of applying for a spot Litecoin ETF in 2025. Just this week, Bloomberg ETF research chief Eric Balchunas pointed out that, due to the similarities between the LTC ETF and 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, sharing some similarities with Bitcoin, such as halving and a fixed supply cap. The U.S. Securities and Exchange Commission 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, the hash rate of Litecoin has surged to an all-time high, indicating that mining activity is increasing. Its hash rate has risen 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 produced per second. The higher the number, the healthier the network, and the greater the impact on LTC price.
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, 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 it with substantial support.
This price is also nearly 25% lower than the previous year-to-date high, at the top 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 to an annual high of around $150, ultimately reaching $200.
Conversely, falling below the key psychological support level of $100 would invalidate the bullish outlook and indicate that the price of Litecoin is likely to decline further. Such a development could bring LTC back to the key support level of $90.
