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Monday, June 10, 2024
HomeCryptoLitecoin price could drop 9% if the dead cat bounce scenario occurs

Litecoin price could drop 9% if the dead cat bounce scenario occurs

Price outlook Litecoin (LTC) has turned bearish after breaking below key support, with onchain data showing that holders are losing interest and confidence in the token.

LTC closed Friday with a loss of 4%, falling below key daily support at $82.40 at press time. In this scenario, LTC could experience a dead cat bounce*, a short-term price increase within an overall downtrend, reaching an imbalance zone between $80.36 and $83.08.

If the market outlook does not improve, LTC may encounter resistance at the following levels:

  1. The midpoint of the imbalance zone at $81.76, coincides with the 61.8% Fibonacci retracement level drawn from the June 6 high of $85.88 to the June 7 low of 75, 09 USD.
  2. Daily resistance at $82.4.

Failure to break above $81.76 could trigger a 9% breakdown, back to a retest of the $75.09 daily support. The relative strength index (RSI) in the 4-hour chart stands at 36.08, just above the oversold threshold of 30, suggesting the possibility of a temporary recovery before the downtrend resumes.

Source: TradingView

According to IntoTheBlock’s In/Out of the Money Map (IOMAP) indicator, approximately 432,070 addresses have accumulated 6.67 million LTC at an average price of $82.76, with purchases occurring between 81 .64 USD to 83.88 USD. If the price rises to this zone, these investors may choose to sell to break even.

From a technical analysis perspective, the $81.76 resistance level is in line with the IOMAP results, marking this as an important reversal point to watch.

Source: IntoTheBlock

Meanwhile, the number of addresses with a zero balance increased from 195,860 on June 4 to 675,450 on June 8, coinciding with a 6% price drop. This suggests capital is escaping LTC as holders lose interest or faith in Litecoin, possibly due to fear of further losses.

Source: IntoTheBlock

Despite the bearish outlook suggested by technical analysis and onchain data, if Litecoin price closes above $82.40 on the daily timeframe, it will invalidate the bearish thesis, which could trigger a 4% increase, pushing the LTC price to a June 6 high of $85.88.

*Dead Cat Bounce is a term used in financial markets, including cryptocurrency markets, to describe a short-term recovery in prices after a series of significant declines. tell. This term implies that, despite a short-term recovery, the market will eventually continue to decline.

In the cryptocurrency market, a dead cat bounce can occur when a digital currency drops sharply for a short period of time, then mounts a short-term recovery. It is often assessed that this recovery does not reflect the long-term market trend and may just be due to some investors looking for opportunities to buy or placing large purchase orders. When supply returns or there is not enough interest from new buyers, prices may continue to decline afterward.


According to FXStreet

Mark Tyson
Mark Tyson
Freelance News Writer. Always interested in the way in which technology can change people's lives, and that is why I also advise individuals and companies when it comes to adopting all the advances in Apple devices and services.


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