Litecoin (LTC) appears to be at a critical juncture, suggesting a possible trend reversal.
Currently, the market value ratio (MVRV) Z-score derived from Glassnode data is -0.23.
This indicator measures the valuation of cryptocurrencies. A similar reading was seen around February 29th, which coincided with LTC trading at $74.62. In a short period of two days, the value of the coin increased to $94.47.
This trend is not unprecedented for Litecoin. Despite negative indicators in March, LTC suffered a price decline, recovering to $109.29 just 10 days later.
LTC is currently trading at $78.62 and the Bitcoin halving is less than four days away. Historically, LTC has shown a tendency to rise sharply before significant Bitcoin-related events.
However, caution should be exercised before assuming an impending price increase and LTC’s performance during previous halving events should be reviewed.
In 2016, LTC traded at $3.19 just before the post-halving rally and reached $4.12 on the day of the event. Conversely, during the 2020 halving, LTC remained in the range of $43 to $46.
Realized capitalization provides insight into market sentiment. A spike in this indicator suggests that coins acquired at low prices are being sold, which could lead to further correction.
Conversely, a decrease in realized market capitalization indicates that it is perceived to be undervalued. Currently, Litecoin’s daily realized market capitalization is -49.83 million, suggesting a possible recovery.
If this indicator continues its downward trend, it could increase the chances of LTC rising ahead of the Bitcoin halving. Conversely, if the direction of the indicator reverses, this prediction can become invalid.
Despite the positive outlook, skepticism persists among some market participants, as evidenced by the decline in the total number of Litecoin holders according to Santiment data.
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