The Silver to Bitcoin’s Gold: Is it Good Time to buy Litecoin (LTC)?

Litecoin [LTC] is one of the few altcoins in the market that is managing to hold on despite a pessimistic market, and even trying to recover from its losses gradually. While resistance from the broader market sentiments is natural, the support it has been receiving from its investors will go a long way in the long-term recovery in the coin.

LITECOIN (LTC): A TECHNICAL OVERVIEW

Source: Tradingview

The silver to Bitcoin’s gold has been failing to mount any proper recovery for more than a year now, ever since it hit its all-time high of $417. On 30 June, LTC was trading at $52, down by 86% from its all-time high.

However, in the last couple of days, Bitcoin has been attempting some measure of recovery, with the active downtrend now losing strength. Even in Litecoin’s (LTC) case – prices are currently trading towards the lower trend line of the downward wedge pattern (marked in orange), but is still very close to the 50-day moving average. A breakout over that would mean the flipping of a short-term downtrend which could eventually turn into a full blown rally going forward.

Along with that, the Relative Strength Index is also at a moderately healthy level of 44 at the time of writing this. Hence, if there is some short-term price hike, it would be supported by the RSI to a large extent before seeing a correction.

But, one thing to note would be the fact that Litecoin’s journey upwards would be fraught with resistances. With the 200-day moving average coinciding with the heavy supply zone (marked in grey) – the probability of a one-sided upward rally is low.

Check out latest LTC Price, Charts & Data.

LITCOIN’S WORRYING METRICS

Despite optimistic technical structures for Litecoin (LTC) – one shouldn’t jump in right now to buy the token. There are a couple of reasons why. One of the first things that one must consider is the number of investors who are currently seeing red on their books. A large number of these investors will naturally be under a lot of pressure and could sell at every high – thus slowing down any potential rally.

Investors in Loss | Source: IntoTheblock

The red region indicates broadly the number of Litecoin investors who are in a loss at current price levels (out of the money). The green depicts those who are still in profit (in the money), presumably some of the earliest investors, while the thing grey region in the middle depicts those who are at breakeven (at the money).

Read more about the current bear market and how you can prepare yourself: What is a crypto market?

LITECOIN SEEING LESS NEW ADDRESS ADDITION

Along with that, ever since the MimbleWimble Upgrade on the Litecoin Network, Number of New Addresses on the blockchain have been steadily going down. This is a natural phenomenon that occurs during every bear run, however still poses a risk that cannot be ignored. Below is a chart that basically measures the number of unique addresses that appeared for the first time in a transaction of the native coin in the network.

Number of New Addresses on Litecoin | Source: Glassnode

This is a seven-day moving average, which helps to smoothen out the line chart and it is clearly evident how quickly the rate of new addresses joining the network has gone down.

LITECOIN (LTC) ACTIVITY ON THE DECLINE TOO

Active Addresses are basically the number of unique addresses that were active in the network either as a sender or receiver. Only addresses that were active in successful transactions are counted. This count has been on a gradual decline too. A drop in the active address count on a network isn’t really a good sign, however considering the crypto market’s current bear run – it is something that isn’t too much of a surprise either.

Active Addresses | Source: Glassnode

Spent Output Profit Ratio | Source: Glassnode

Despite the one or two instances where the SOPR fell marginally below 0.975, it has sustained more or less between 0.995 to 1.

CONCLUSION

So overall, Litecoin is one token that has a lot of things going for it and is probably just waiting for the right market conditions to make its jump. A rally has been long time due in the coin and if general market sentiments improve over the next couple of months, this could be a very good recovery candidate amongst the top cryptos in the market.