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Litecoin price rally halted at $60 on Aug 9, having rebounded 25% from the Monday historic crash, however, a key resistance sell-wall now threatens to halt the LTC recovery phase.
LTC Price Hits $60 Roadblock after 25% Rally
Litecoin (LTC) has witnessed a sharp recovery over the past four days, rebounding by nearly 25% from the August 5th market crash. The initial plunge saw LTC prices dip below $50, marking one of the steepest declines in recent weeks. However, a series of bullish catalysts provided significant support, driving the price back up to the $60 range.
The most prominent factor boosting LTC’s price was the renewed interest in cryptocurrency ETFs, which led to fresh inflows into the market. Additionally, the $125 million fine imposed on Ripple by the SEC, though initially perceived as bearish for the broader crypto market, spurred confidence among Litecoin investors, interpreting it as a sign of regulatory clarity.
Furthermore, Russia’s decision to legalize crypto mining added to the positive sentiment, providing a favorable macro backdrop that encouraged buying activity.
However, as LTC approached the $60 level, it encountered significant resistance, as seen in the TradingView chart. The price struggled to break above this level, and bearish pressure began to reassert itself, leading to a minor pullback. This resistance zone has proven to be a formidable barrier, halting the momentum of the recent rally and leaving traders cautious.
Negative LTC Funding Rate Nullifying Bullish Sentiment
While the recent rally has been encouraging, the negative funding rate for LTC is a concerning signal that could undermine the bullish sentiment.
The Funding Rate chart shows that on August 9th, the Open Interest-Weighted (OI-Weighted) funding rate dipped into negative territory at -0.0013%, coinciding with LTC’s price stalling around the $60 mark.
Historically, when a mega-cap asset like LTC faces a significant pullback from a key resistance during a broader market rally, it often indicates bearish headwinds in the derivatives market.
The persistent negative funding rate suggests that short positions continue to outweigh longs, reflecting that bears, who were in control just days ago, still hold significant positions at key price levels.
This dynamic is likely why LTC encountered resistance at $60, as bears defend these levels to prevent further upside.
Despite the recent bullish catalysts, the underlying market sentiment, as reflected in the funding rate, points to a potential challenge in maintaining the upward momentum. If the negative funding rate persists, it could signal a broader bearish trend, leading to further consolidation or a possible retracement in LTC’s price.
Traders should closely monitor these levels, as a failure to break above $60 could cause LTC to revisit lower support zones in the coming days.
LTC Price Forecast: $60 Breakout Could Trigger More Gains
Litecoin price is currently hovering close to the critical $60 resistance level, and the technical indicators suggest that a breakout above this level could potentially open the door for further gains.
The daily LTC/USD chart reveals that after experiencing a sharp decline to around $50, LTC has managed to stage a 25% recovery, bouncing back strongly over the past four days. This recovery is underscored by the Donchian Channel, which shows that the price has moved from the lower bound towards the middle and upper ranges, indicating increasing bullish momentum.
The Chop Zone Indicator (CHOP) is currently at 33.07, which suggests that the market is trending after a period of consolidation. This indicator supports the notion that if LTC can break above the $60 resistance level, it could gather enough momentum to push towards the next significant resistance level around $63.39.
However, it’s important to note that this level has previously acted as a strong resistance, and traders should watch for potential profit-taking if LTC approaches this area.
On the downside, the $57 support level is crucial to maintaining the bullish outlook. A drop below this level could signal a potential reversal and expose LTC to further declines, possibly retesting the $50 psychological support level. However, as long as LTC holds above $57 and the current upward momentum continues, the outlook remains cautiously bullish, with the potential for a breakout above $60 leading to further gains.
In summary, Litecoin’s price action indicates that a successful breakout above the $60 resistance level could pave the way for additional upside potential. Traders should monitor the $63.39 resistance and $57 support levels closely as they could provide critical insights into the future direction of LTC in the short to medium term.