Litecoin price is showing a rather unexpected movement ahead of the halving event, expected later on Wednesday. Unlike Bitcoin (BTC) and Ethereum (ETH) which are slightly in the green, LTC is in the red, trading at $90.
The bearish technical outlook in Litecoin price started to take shape in early July, following a massive pre-halving rally from $71 around mid-June to $115.
In addition to a descending trendline, LTC’s upside was capped under resistance at $95. Meanwhile, its downside has been supported strongly by massive buyer congestion at $88, leaving the 12th largest crypto in a range channel.
Litecoin boasts $6.6 billion in market capitalization, with $1.2 billion in trading volume coming in over 24 hours.
Litecoin Price Faces Declines Ahead of Halving
Like Bitcoin, Litecoin undergoes halving—the event that slashes miner rewards by half, thus reducing the supply of the coin as a way to minimize inflation. This means that once halving is complete on August 2, miners will receive 6.25 LTC for every on-chain block processed, instead of the 12.5 LTC they have been getting in the last four years.
Investors are buying the news because as supply shrinks, demand is expected to increase, in turn, triggering a potentially massive post-halving rally. The project’s founder, Charlie Lee is among bullish investors who anticipate LTC to post massive gains.
“If the supply side gets cut in half and the demand stays the same, then the price should go up,” Lee said during a Twitter spaces event.
Despite the positive sentiment surrounding the halving, the current LTC technical picture shows that investors need to manage their expectations ahead of and post the halving event.
⚡️ Is #Litecoin going through a “buy the rumor, sell the news” scenario with less than 9 hours until the 16:34 UTC #halving? Social dominance has predictably jumped with many showing panic signs. Patience through the $LTC volatility is proving to be tough. https://t.co/0ojqI3OpUy pic.twitter.com/b8XpRhECtt
— Santiment (@santimentfeed) August 2, 2023
On the daily chart, Litecoin price holds below all the moving averages, including the 200-day EMA (red), the 100-day EMA (blue), and the 200 EMA (purple). If short positions in LTC continue to increase, LTC may find a bearish escape below the lower range support at $88 – a move that might propel losses to $80.
A sell signal from the Moving Average Convergence Divergence (MACD) indicator further complicates the situation by exposing Litecoin to more short positions. However, it is prudent for investors to wait for a confirmed breakout below $88 before activating their sell orders to avoid sudden bull traps.
The Bullish Scenario in Litecoin Price
With support between $88 and $90 holding firmly, the impact of the halving event is bound to change the supply and demand dynamics in favor of LTC bulls.
That said, investors cannot ignore the possibility of a post-halving rally eyeing highs above $100. Some of the signals to look out for are a break above the descending trendline and the upper range channel resistance at $95.
This followed by sustained price movements above $100 would imply an enhanced technical outlook, calling for new profit targets at $115, $120, and $130, respectively.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.