Litecoin Price Forecast: LTC likely to crash double-digit as dead-cat bounce scenario unfolds

FXStreet
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  • Litecoin price approaches its key resistance, with price action emerging as a classic dead-cat bounce pattern.

  • Side-lined investors looking to short LTC can do so between $93 and $95.

  • On-chain data support the bearish thesis as profit-taking and dormant wallet activities are rising.

Litecoin (LTC) is recovering and nearing its key resistance level, with price action emerging as a classic dead-cat bounce pattern. The technical outlook suggests that side-lined traders looking to short LTC could consider entry points between $93 and $95 in anticipation of the price resuming its downtrend. On-chain data supports the bearish thesis as LTC’s profit-taking and dormant wallet activities are rising.

Litecoin’s holders’ profit booking activity reaches the highest level in two months

Santiments’ Network Realized Profit/Loss (NPL) metric indicates that Litecoin holders are realizing gains.

As shown in the graph below, the NPL experienced a significant spike on Saturday, marking the highest profit booking activity since March 24. Later on Monday this week, a similar spike of lesser intensity was also seen. These spikes indicate that holders are, on average, selling their bags at a significant profit and increasing the selling pressure.

LTC NPL chart. Source: Santiment

LTC NPL chart. Source: Santiment

Examining Santiment’s Age Consumed index also shows bearish signs. The spikes in this index suggest dormant tokens (tokens stored in wallets for a long time) are in motion, and it can be used to spot short-term local tops or bottoms. As in LTC’s case, history shows that the spikes were followed by a decline in Litecoin’s price as holders transferred their tokens from wallets to exchanges, thereby increasing selling pressure.

The most recent uptick on Monday was the highest spike since mid-March, which forecasted that LTC was ready for a downtrend.

LTC Age Consumed chart. Source: Santiment

LTC Age Consumed chart. Source: Santiment

Litecoin Price Forecast: Dead-cat bounce scenario develops

Litecoin price broke and closed below its ascending trendline (drawn by connecting multiple lows since early April) and its 200-day Exponential Moving Average at $93.70 on Thursday and declined by 8.12% the following day. However, it recovered slightly in the next three days. At the time of writing on Tuesday, it hovers around $89.30.

In this scenario, LTC might experience a dead-cat bounce—a brief price increase within a broader downtrend—potentially facing rejection from the 200-day EMA level at $93.70. This level roughly coincides with the 50% price retracement level at $95.8, making these levels a crucial reversal zone.

Side-lined investors looking to short LTC can do so between the $93.70 and $95.80 ranges, with the stop-loss set slightly above its weekly resistance at $96.30.

If LTC faces correction from the levels mentioned above, it could extend the decline to retest its Saturday low of $83.31. A successful close below this would extend the losses to retest the next weekly support level at $77.19.

The Relative Strength Index (RSI) on the daily chart reads 44, below its neutral level of 50, indicating bearish momentum. Moreover, the Moving Average Convergence Divergence (MACD) indicator also displayed a bearish crossover, supporting the bearish thesis.

LTC/USDT daily chart

LTC/USDT daily chart

On the other hand, if the Litecoin price closes above the weekly resistance at $96.30, the bearish thesis would be invalidated. Such a scenario could extend the rally toward the May 10 high of $107.05.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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