Yesterday, Litecoin (LTC) closed above a descending wedge pattern, indicating a surge in buying pressure. The altcoin had been trading in this pattern since March 31st.
Although this was a bullish milestone for altcoins, traders who took advantage of the rally by selling their holdings suffered heavy losses.
Litecoin holders realize investment loss
An asset trades within a descending wedge pattern when its price moves between two downward trend lines. The upper trend line acts as a resistance level and the lower trend line acts as a support level.
Litecoin started trending within this pattern on March 31st and has since seen its price drop by ~27%. At the time of writing, the altcoin was trading at $71.74.
Litecoin analysis. Source: TradingView
If the price of an asset breaks above the falling wedge, it is a bullish signal. This indicates that buyers are overwhelming sellers and prices may be trending upwards.
On-chain data revealed yesterday that some market participants who took advantage of the breakout and sold their holdings suffered heavy losses.
This is based on a measurement of the coin’s Network Realized Profit and Loss (NPL). Yesterday, this indicator fell to -5.25 million.
Read more: Litecoin: A complete guide to what Litecoin is and how it works
Realized profit and loss of Litecoin network. Source: Santiment
Asset NPLs track whether asset holders across the network are selling at a profit or at a loss.
Such a decline in the value of this indicator indicates, on average, that the holder realizes a loss on his investment. This suggests market sentiment is bearish as traders panic sell and experience capitulation.
LTC Price Prediction: Price Rise May Be Unsustainable
An evaluation of the LTC price and Daily Active Addresses (DAA) divergence indicators suggests that the altcoin’s recent rise in value may be short-lived.
This metric compares an asset’s price change to the daily change in the number of active addresses. Investors use this to track whether price movements are supported by corresponding network activity.
At the time of writing, LTC’s price DAA divergence is negative at -36.78. This shows that the price of the coin is growing faster than DAA. This indicates that the price increase may be due to speculation or short-term buying, and not necessarily due to increased adoption or long-term investor interest. This puts them at risk of losing recent profits.
Discrepancy between Litecoin price and daily active addresses. Source: Santiment
If this happens, LTC’s value could fall to $70 at the 0.236 Fibonacci retracement level.
Read more: How to buy Litecoin (LTC) and everything you need to know
Litecoin analysis. Source: TradingView
If current trends continue, it could continue rising and trade at $78.11.
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