Can Litecoin’s Halving Sustain its Price Above $90?
With less than two weeks until Litecoin’s halving, traders are questioning whether the additional scarcity effect will be enough to sustain the LTC price above $90. The price of Litecoin has declined by 19% in the last 18 days, but it has shown a positive 31% performance this year. However, there is a concerning statistic coming from the derivatives market that indicates a sharp correction is likely underway.
Key Points:
- Litecoin futures open interest dropping below $500 million has historically led to price drops of 38% or higher.
- Increased demand for leveraged futures contracts suggests potential risk of a sharp correction.
- Higher active contracts allow for larger price swings due to leverage and potential liquidations.
- Litecoin’s open interest dropping below $500 million in the past has led to significant price corrections.
- Previous instances of open interest dropping below $500 million resulted in drawdowns of 30% or more.
A Look Back at the November 2021 Crash and Open Interest
On Nov. 10, 2021, Litecoin’s open interest surpassed $500 million, coinciding with a six-month price high of $289. However, when open interest dropped below $500 million on Nov. 14, 2021, Litecoin’s price crashed 48% in the following 24 days. Similar events occurred in February 2021 and May 2021, with open interest dropping below $500 million and leading to significant price declines.
Hot Take
Given the historical data and the current open interest level, there is a potential risk of a 30% drawdown in Litecoin’s price if open interest declines from the current $500 million level. Traders and investors should closely monitor Litecoin’s open interest as it could be an indicator of potential price corrections. However, this article does not provide investment advice, and readers should conduct their own research before making any decisions.
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